At noon on March 21, the sports brand Kappa China announced its performance announcement. Revenue in 2017 was RMB 1.353 billion, which was a decrease of 9.9% year-on-year, and net profit was down 7.5% year-on-year to RMB 805 million. Gross profit margin decreased by 0.5 percentage point to 56.2%. .
What attracted the most attention was the performance of Kappa in the Chinese market - revenue of 893 million yuan, 12.02% lower than the 10.15 billion yuan in 2016. Among them, Kappa apparel revenue, which accounted for 48.9% of sales, fell 10.6% year-on-year. This resulted in the Kappa brand's gross profit margin declining by 1 percentage point year-on-year, which is currently 65.2%.
As of today's close, China Dongxiang’s stock price fell 5.66% to HK$1.5. This does not match the market attention Kappa had previously received.
In 2017, Kappa seized the resurgence of retro style, launched serial products with brand DNA attributes, and continued to try cross-border cooperation, such as the Japanese designer Kurashiki Ishiki, the Copenhagen Music Label POSH ISOLATION, the German fashion website HIGHSNOBIETY The four-party joint series with Kappa, and the original street brand C2H4 and Kappa's "UNDECAYABLE" series of Chinese American designer Chen Yixi.
â–² Co-C2H4 and Kappade
From product design to brand marketing, Kappa made a lot of noise last year. But in the Chinese market, Kappa's performance is not as hot as it looks.
The move closed Kappa's inefficient stores. By the end of 2017, Kappa had 1,487 stores, a decrease of 76 compared to 2016. In order to consolidate the control of terminal sales, Dongxiang will also join Tianjin Maisheng Yuehe Sporting Goods Co., Ltd., which is engaged in the distribution and retail of sporting goods in Tianjin and Hebei.
Kappa also tried to deepen the domestic e-commerce market. The sales of children's clothing on the “Double 11†network increased by 30% year-on-year. However, this new business is still in its infancy.
The cash flow situation also deteriorated. Kappa's average inventory turnover days in China increased significantly from 149 days in 2016 to 210 days. Average trade payables turnover days and average trade receivables turnover days also rose to 96 days and 49 days, respectively.
The children's wear business is currently a strong growth point for Kappa. In the two years after returning to the trend of management, Kappa Children's Clothing achieved sales of RMB 114 million, a year-on-year increase of 32.6%, accounting for 11% of Kappa's revenue in China. Among them, the flow of water under the line increased by 59% year-on-year, and the online flow of water increased by 43%. In the past year, Kappa added 88 stores, bringing the total to 350.
In addition to Kappa, the company also has phenix, a Japanese ski brand, which achieved revenue of 221 million yuan last year, a 10.5% decline year-on-year.
It is worth noting that investment business has become an important growth engine in the past few years. Last year, the company realized investment income of 942 million yuan, a year-on-year increase of 19.7%, thanks to the investment in projects such as Alibaba, Ant Financial, and Jingdong Finance. Trends stated in the financial report that the investment in these projects has been and is expected to continue to provide satisfactory returns to the Group.
2017 was the tenth anniversary of the move. Zhang Zhiyong served as CEO and executive director of the company in October and subscribed for 2.44% of the shares.
Trends said in the financial report, “Mr. Zhang has more than 20 years of industry experience, has a profound understanding of the changes in the Chinese consumer market, the establishment and shaping of sports brands, the combination of sports and digitalization, and the change management of Chinese companies. And practical experience."
Source: Lazy Bear Sports
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