Daphne International Holdings Limited · HKEX:210
Daphne International — H1 2015 Earnings Presentation
33 slides from Daphne International's earnings presentation, Aug 26, 2015
Slide 1: 2015 Interim Results Presentation
2015 Interim Results Presentation 26 August 2015
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Daphne International Holdings Limited (“the Compan
Slide 3: 1H 2015 – More Challenging Than Expected
1H 2015 – More Challenging Than Expected • The sales performance was below expectation, due to a number of factors: – GDP growth of the China market continued to slow down – Consumer sentiment remained soft – Erratic weather coupled with delayed spring & summer seasons dampened the appetite for shop
Slide 4: Major Progress in 1H 2015
Major Progress in 1H 2015 • Increased Group gross profit margin by 4.3 ppt to 60.7% – Core Brands business gross margin expanded by 2.9 ppt to 58.9% • Enriched and restructured the product range into seven product series under Daphne to broaden the brand appeal to a wider group of customers • E-comm
Slide 5: Group Gross Margin Expanded
Group Gross Margin Expanded • Increased by 4.3 ppt despite a lower ASP for core-brand products Gross margin (For the six months ended 30 June) • Improved sales mix • Reduced retail discounts 70% 64.0% +1.6 ppt 65% 62.4% • Lower product costs 60.7% +4.3 ppt 60% – Improvement made in production, 56.4%
Slide 6: Enhanced Brand & Store Image
Enhanced Brand & Store Image • Enriched and restructured into seven product lines with distinctive spokesperson or icon for each to strengthen the brand image, increase brand awareness and broaden its appeal to a wider group of customers • Added one of the leading young actresses in Mainland China,
Slide 7: Further Market Segmentation to Broaden the Brand Appeal
Further Market Segmentation to Broaden the Brand Appeal Trend-setting, Stylish, vogue sexy, enchanting Elegant, exquisite, designed by Gao Yuanyuan Parties & Evening Charm Cosmopolitan Ondul Jun Ji-Hyun 全智賢 Cecilia Liu 劉詩詩 Gao Yuanyuan 高圓圓 Cute, Minimalist, Comfortable, Young, sweet, basic, versatil
Slide 8: Strong Brand Equity
Strong Brand Equity China Brand Power Index • Ranked top in the Women’s Shoes category in the “China Brand Power Index 2015”. • Conducted by Chnbrand, one of China's most reliable brand evaluation organisations, under the guidance of the Ministry of Industry and Information Technology • Survey cover
Slide 9: Fast Growth of E-Commerce Business
Fast Growth of E-Commerce Business • E-commerce business continued to achieve sales growth, and maintained its profitability • Strengthened its partnership with major online shopping platforms – Signed strategic partnership agreement with Alibaba in July 2015 to strengthen online marketing, promotio
Slide 10: Financial Review
Financial Review __ DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRARERERARAD
Slide 11: Group Financial Highlights
Group Financial Highlights (HK$ million) 1H 2015 1H 2014 Change Turnover 4,374.3 5,080.7 -13.9% Gross profit 2,654.6 2,865.5 -7.4% Operating profit 11.0 240.7 -95.4% Profit attributable to owners of the 2.5 172.4 -98.5% Company Basic EPS (HK cents) 0.2 10.5 -98.1% Interim dividend per share (HK cent
Slide 12: Group Turnover
Group Turnover • Core Brands business remains the largest contributor to Group turnover Group Turnover Breakdown (For the six months ended 30 Jun) 2015: HK$ 4,374.3 million 2014: HK$ 5,080.7 million 1% 2% 9% 7% 90% 91% Core Brands business Other Brands business OEM business Note: Core Brands busines
Slide 13: Group Operating Profit Analysis
Group Operating Profit Analysis • Group profit margin increased by 4.3 ppt YoY – Adopted new pricing strategy – Improved sales mix – Lower product costs • Group operating expenses are comparable with last year – Strived to contain rising operating expenses under inflationary environment • Group oper
Slide 14: Inventory Turnover Days
Inventory Turnover Days • Group inventory level continued to decline as compared to that of 2014 year end, and 2013 year end • Group inventory turnover days was 238 days – Despite lower overall inventory level, inventory turnover days increased due to sales decline Group Inventory Level (HK$ million
Slide 15: Working Capital & CAPEX
Working Capital & CAPEX • CAPEX decreased YoY – One-off purchase of self-use office incurred additional CAPEX last year – Less store openings in 1H 2015 1H 2015 1H 2014 Change Average Inventory Turnover (days) 238 208 +30 Average Debtors Turnover (days) 14 13 +1 Average Creditors Turnover (days) 105
Slide 16: Other Key Financial Indicators
Other Key Financial Indicators • Redemption of convertible bonds resulted in lower cash & bank balances • Post convertible bonds redemption, the Group maintains net cash position As at As at (HK$ million) 30 Jun 2015 31 Dec 2014 Change Cash and bank balances 915.5 1,528.7 -40.1% Bank loans 495.1 96.
Slide 17: Operational Highlights
Operational Highlights “Bea DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRARERERARAD
Slide 18: Group Sales Network
Group Sales Network • Cautious store network development Number of Points-of-Sales (POS) • Net reduction of 181 Core Brands POS, bringing the total to 6,221 6,757 (+159) 6,598 (-104) 6,569 (-188) • Net reduction of 7 Other Brands POS 364 (-19) 355 (-9) 348 (-7) 6,234 (-85) 6,402 (+168) 6,221 (-181)
Slide 19: Core Brands Sales Network
Core Brands Sales Network • Net reduction of 181 POS (including 117 directly-managed stores and 64 franchised stores) • Stepped up store closures in 2Q 2015 Number of POS As at As at Change % Change 30 Jun 2015 31 Dec 2014 Directly-managed POS 5,631 (91%) 5,748 (90%) -117 -2.0% Franchised POS 590 (9
Slide 20: Core Brands Sales Network (cont’d)
Core Brands Sales Network (cont’d) • The Group maintained greater representation in lower tier cities As at 30 Jun 2015 As at 31 Dec 2014 No. % No. % Change % Change Tier 1 Cities 724 12% 731 12% -7 -1.0% Tier 2 Cities 1,556 25% 1,607 25% -51 -3.2% Tier 3 Cities 1,183 19% 1,238 19% -55 -4.4% Tier 4-
Slide 21: Core Brands Business - Performance
Core Brands Business - Performance • Turnover of Core Brands business declined by 13.9% • Core Brands operating margin was 1.0% (HK$ million) 1H 2015 1H 2014 Change Turnover 4,034.9 4,685.0 -13.9% Gross profit 2,376.5 2,622.1 -9.4% Gross margin 58.9% 56.0% +2.9 ppt Operating profit 41.8 264.8 -84.2%
Slide 22: Core Brands Business - SSSG
Core Brands Business - SSSG 1Q 2015 2Q 2015 1H 2015 Same store sales growth -15.9% -17.7% -16.9% • Average selling price decreased by 8.2% to RMB 168 – Change in sales mix 22
Slide 23: Other Brands Business
Other Brands Business (HK$ million) 1H 2015 1H 2014 Change Turnover 389.0 358.1 +8.6% Gross profit 249.0 223.3 +11.5% Gross margin 64.0% 62.4% +1.6 ppt Operating profit / (loss) 5.0 (8.5) From loss to profit Operating margin 1.3% (2.4%) +3.7 ppt • Driven by strong growth in • Overall gross profit ma
Slide 24: Outlook
Outlook __ DAPHNE INTERNATIONAL HOLDINGS LIMITED BRM AREER BRAD
Slide 25: Market Outlook for 2H 2015
Market Outlook for 2H 2015 Negative Positive • Consumer sentiment remained • PRC government policies to promote subdued domestic consumption • Recent volatility in stock market may • Urbanisation continues further weaken the already soft retail market • Wage hikes increase purchasing power of mass-s
Slide 26: Transformation
Transformation 2015 Long-Term Targets Products & • Enrich the product range • Affordable, fashionable and quality Merchandising products to address different • Upgrade product quality and styles customers and occasions • Focus on high-growth product categories • Improve merchandising • Enhance inven
Slide 27: Transformation (cont’d)
Transformation (cont’d) 2015 Long-Term Targets Sales Operation • Enhance sales staff productivity, by introducing new • To increase sales and productivity incentive schemes and systems • To improve staff retention and • Use of part-time staff quality • Front-line staff optimisation • To increase cos
Slide 28: Highlights of Business Plan
Highlights of Business Plan • Despite intense competition and soft consumer sentiment, opportunities beckon: Store rationalisation including stepping up closures of Store Network under-performing stores, and improve store profitability To adopt omni-channel strategy by accelerating the development E
Slide 29: Business Outlook and Strategy – in Medium to Long Term
Business Outlook and Strategy – in Medium to Long Term • Prospect of consumption growth in China is still promising in long term • Store rationalisation and selective store openings will improve store profitability • Accelerate e-commerce growth by increasing resources and fuelling continuous suppor
Slide 30: Focus for Driving Improvements
Focus for Driving Improvements Increase profit Increase Enhance return to profitability shareholders 30
Slide 31: Vision
Vision A leading brand management company that provides ladies and their family members with trendsetting and quality products. “ In view of the fast-changing retail market, increasing competition, and more diversified and sophisticated customers, the Group is determined to make bold moves to adapt
Slide 32: Thank you
Thank you cesses Q&A session __ DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRARERERARAD
Slide 33: Investor Relations Contact
Investor Relations Contact Ms. Macy Leung +852 2367 9022 macyleung@daphneholdings.com 33
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