Daphne's Medium-Term Net Profit Plunged 98.5%

As of June 30th, Daphne's international operating profit plunged 95.4%, down from HK $240 million 700 thousand in the same period last year to HK $11 million, which was mainly under the heavy pressure of revenue decline.

With the high fixed cost structure and the inflationary pressure of major operating costs, the operating profit margin dropped to only 1%, compared with 5.7% in the same period last year.

Net profit was also reduced by 98.5% to HK $2 million 500 thousand, with net profit of HK $172 million 400 thousand in the same period last year, and the basic earnings per share decreased from 10.5 Hong Kong cents to 0.2 Hong Kong cents.

The group announced that no interim dividend would be paid, with a median dividend of 3.5 Hong Kong cents in the same period last year.

During the period, the weakness of consumption intention deteriorated due to the delay in spring and summer, and the earlier discounts in the same industry also led to more intense competition in the market.

Same store sales showed negative growth with a 16.9% decline in data.

On the other hand, the group continued to maintain a prudent expansion strategy. The core brand sales point therefore decreased by 181 to 6221 over the same period last year (5631 outlets and 590 franchised stores).

Two major reasons led to an annual decline of 13.9% to HK $4 billion 374 million 300 thousand in the medium-term income of the group, which was HK $5 billion 80 million 700 thousand in the same period last year, which led to an increase of 30 days to 238 days in inventory turnover.

Despite the poor performance of core brands, sales of other brand businesses from middle and top brands increased by 8.6% to HK $389 million, which rose to about 9%, and they turned around to profitability. Operating profit increased from HK $-850 in the same period last year to HK $5 million.

Gross profit margin benefited from an increase of 430 basis points in the proportion of new product sales, up from 56.4% in the same period last year to 60.7%.

As of June 30th, the total number of employees in mainland China, Taiwan and Hongkong has decreased by 3000 to 23000.

Looking forward to the second half of this year, the focus of Daphne international improvement plan will be on improving sales and improving.

In terms of expenditure control and electronic commerce development, specific measures include increasing sales promotion, inspection and adjustment.

Procurement pricing promotion strategy, considering the integration of the store network, substantial adjustment of physical distribution channels, and further cooperation with all online shopping platforms.

Daphne International (0210.HK) closed at HK $1.43 on Tuesday, up 6.72% from a day ago, which has fallen 50% since 2015.