Daphne Medium-Term Net Profit Plunged 98.5% Will Pform E-Commerce Online Development

The interim results released by Taiwan shoe maker and Daphne International Holdings Ltd on Tuesday showed that the profitability of the first half of the year, as shown in the earnings warning issued in late July, showed a significant regression as the sales of Daphne and shoe sales of the two core brands were weak.

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 affected by the significant pressure of revenue decline, the high fixed cost structure of retail business 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. The early discount also led to more intense competition in the market. Under this background, the core brand and same store sales had a negative growth, according to the no fashion Chinese network data, the decline was 16.9%.

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.

On the other hand, it 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 focus on improving sales, improving inventory management, controlling expenditure and strengthening.

On the development, specific measures include strengthening 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 closed at HK $1.43 on Tuesday, up 6.72% from a day ago, which has fallen 50% since 2015.