China Dongxiang Announces Operational Results for FY2020/21 Q1

Offline Retail Performance
Starts Picking Up

E-commerce Sales Continues
to Grow

HONG KONG, CHINA – Media
OutReach – 17 July
2020 – The
leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd.
(“China Dongxiang” or “the Company”, together with its
subsidiaries, “the Group”, HKEx stock code: 3818) announces its operational results for the three
months ended 30 June 2020 (”FY2020/21 Q1”).

 

For the FY2020/21 Q1, the retail performance of Kappa stores
(excluding Kappa kids’ apparel business and Japan business) for the overall
platform registered a mid-to-low single-digit decrease on a year-on-year basis,
of which the offline business recorded a low-teen decrease and the e-commerce
business recorded a mid-to-low thirties growth. Offline retail performance in
May 2020 recorded a low-single-digit growth as compared with that in April 2020 due to on-going market recovery. Retail discount has
dropped by 4 percentage points as affected by the market, with discount rate still under the controllable range.

 

As for the same-store-sales (“SSS”) during FY2020/21 Q1, in respect
of Kappa stores (excluding Kappa kids’ apparel business and Japan business)
which have been in operation since the beginning of the same quarter the
previous year, the SSS for the overall platform registered a mid-single-digit
decrease on a year-on-year basis, of which the offline business recorded a
mid-to-low-teen decrease, while the e-commerce business recorded a mid-to-low
thirties growth.

 

For the first quarter ended 30 June 2020, the number of Kappa-branded stores of the
Group was 1,147 (excluding Kappa kids’ apparel business and Japan business),
representing a net increase of 18 as compared with that as at 31 March 2020
(the end of FY2019/20). In the next step, the Group will continue to close inefficient
stores.

Mr. Zhang Zhiyong, CEO,
President and Executive Director of China Dongxiang, said, “Market competition has been intensified since the outbreak of
COVID-19. We anticipate that there will be a year-on-year volume growth
in sports apparel and equipment industry this year, though selling prices will be under
pressure. Entering the third year of ‘direct-franchise’ model reform for Kappa brand, the Group’s inventory level is expected to decline. By implementing such business reforms, the
market share of Kappa brand has been maintained during the period. In addition, our management has improved and implemented localised strategies
for the sales teams in an orderly manner, while driving reforms and
construction of  the product team, with an aim to enhance core competitiveness of the brand. We will continue to closely monitor the changes of
the pandemic, strengthening supervision and control over our operations, in order to minimise the negative impacts brought by the pandemic,
protecting the Group’s value and shareholders’ interests.”

 

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China Dongxiang (Group) Co., Ltd. is a leading international sportswear
brand enterprise in China which has been listed on the Main Board of the Hong
Kong Stock Exchange since 10 October 2007. The Group is primarily engaged in
the design, development, marketing and wholesale of branded sportswear in
China. Currently, China Dongxiang owns all rights to the internationally
renowned Kappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiang
completed the acquisition of Phenix, a Japanese sportswear enterprise. Phenix
is the most popular ski brand in Japan with the largest market share, as well
as a well-known brand in the international market.