Daphne International Holdings Limited · HKEX:210
Daphne International — FY2017 Earnings Presentation
36 slides from Daphne International's earnings presentation, Mar 29, 2018
Slide 1: 2017 Annual Results Announcement
2017 ANNUAL RESULTS ANNOUNCEMENT 29 MAR 2018
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: Transformation in Progress: Business Highlights
Transformation in Progress Business Highlights Women’s footwear retail market became increasingly competitive as local peers (both offline and online) stepped up their discounting Efforts made for major brand revamp and product upgrade initiatives started to be reflected at consumer touch-points
Slide 4: Transformation in Progress (Cont'd)
Transformation in Progress (Cont’d) Business Highlights (Cont’d) Improved performance reflected in autumn and winter collections 2017 Challenges faced in channel re-alignment which will take time to address Modification and fine-tuning of the new measures and systems required in the early stag
Slide 5: Transformation in Progress: Performance Highlights
Transformation in Progress (Cont’d) Performance Highlights Group turnover development (-19.9% YoY) in line with reduction of total POS (-21.7% YoY) Gross profit margin increased by 1.9ppt YoY to 52.8% Operational expense reduced by 17.2% broadly in line with the decrease in Group turnover Fu
Slide 6: Financial Review
Financial Review
Slide 7: Group Financial Highlights
Group Financial Highlights (HK$ million) 2017 2016 Change Turnover 5,211.0 6,501.7 -19.9% Gross profit 2,753.0 3,311.7 -16.9% Operating loss (688.8) (819.5) -15.9% Loss attributable to shareholders (734.2) (819.1) -10.4% Basic loss per share (HK cents) (44.5) (49.7) -10.5% Dividend per share (HK cen
Slide 8: Group Turnover Breakdown
Group Turnover Breakdown Group Turnover Breakdown (For the year ended 31 December) 2017: HK$5,211.0 million 2016: HK$6,501.7 million 14% 12% 86% 88% Core Brands business Other Brands business Note: Core Brands business refers mainly to the operations under the brands “Daphne” and “Shoebox” in Mainla
Slide 9: Group Gross Margin
Group Gross Margin Group’s gross margin increased by 1.9ppt YoY, mainly due to: - Increased weighting of new products in the sales mix - Adherent to stable pricing - Improvement in sales efficiency 9
Slide 10: Group Operating Expense
Group Operating Expense Decreased by HK$722.7 million (-17.2% YoY) Achieved reduction in operating expense that was broadly in line with the decline in turnover, despite investment in new initiatives and inflationary operating environment Group Operating Expense (HK$ million) 6,000 5,412.7 5,559
Slide 11: Group Operating Profit Analysis
Group Operating Profit Analysis Group gross margin increased by 1.9ppt YoY Group operating margin dropped by 0.6ppt YoY Operating Profit Analysis (For the year ended 31 December) (HK$ million) 0.0 -200.0 -400.0 -600.0 -800.0 (688.8) -1000.0 (819.5) -1200.0 +359.4 -1400.0 -1600.0 -558.7 +330.0 20
Slide 12: Inventory Level and Turnover Days
Inventory Level and Turnover Days Group inventory turnover days was 198 days (2016: 201 days) Group inventory level continued to decrease to HK$1,246.9 million, a reduction of HK$167.6 million, as compared to that of 2016 year end After reviewing inventory level, the Group reversed provision f
Slide 13: Working Capital and Capital Expenditure
Working Capital and Capital Expenditure Capital expenditure increased due to increased store renovations resulted from the launch of new brand image 2017 2016 Change Average Inventory Turnover (days) 198 201 -3 Average Debtors Turnover (days) 14 13 +1 Average Creditors Turnover (days) 121 130 -9 C
Slide 14: Other Key Financial Indicators
Other Key Financial Indicators The Group maintained its net cash position As at 31 Dec 2017 As at 31 Dec 2016 Change Cash and bank balances (HK$ million) 486.3 989.5 -50.9% Bank loans (HK$ million) 156.3 296.7 -47.3% Equity attributable to shareholders (HK$ million) 2,874.9 3,371.4 -14.7% Current
Slide 15: Operational Highlights
Operational Highlights
Slide 16: Group Sales Network
Group Sales Network Number of Points-of-Sales (POS) of the Group 5,930 (-827) 333(-22) 4,900 (-1,030) 302(-31) 3,836 (-1,064) 247(-55) 5,597 (-805) 4,598 (-999) 3,589 (-1,009) Core Brands had a net reduction of 1,009 POS, bringing the total to 3,589 2015 2016 2017 Other Brands had a net closure
Slide 17: Core Brands Sales Network
Core Brands Sales Network Net reduction of 1,009 POS (including 943 directly-managed stores and 66 franchised stores) Number of POS As at 31 Dec As at 31 Dec Change % Change 2017 2016 Directly-managed POS 3,303 (92%) 4,246 (92%) -943 -22.2% Franchised POS 286 (8%) 352 (8%) -66 -18.8% Core Brands T
Slide 18: Core Brands Sales Network (cont'd)
Core Brands Sales Network (cont’d) Maintained greater representation in lower tier cities As at 31 Dec 2017 As at 31 Dec 2016 Change % Change No. % No. % Tier 1 Cities 364 10% 514 11% -150 -29.2% Tier 2 Cities 877 25% 1,125 25% -248 -22.0% Tier 3 Cities 680 19% 890 19% -210 -23.6% Tier 4-6 Cities
Slide 19: Core Brands Business - Performance
Core Brands Business - Performance (HK$ million) 2017 2016 Change Turnover 4,703.2 5,936.0 -20.8% Gross profit 2,314.9 2,808.2 -17.6% Gross margin 49.2% 47.3% +1.9ppt Operating loss (667.6) (744.1) -10.3% Operating margin -14.2% -12.5% -1.7ppt (For the year ended 31 December) Core Brands’ turnover
Slide 20: Other Brands Business - Performance
Other Brands Business - Performance (HK$ million) 2017 2016 Change Turnover 733.5 813.0 -9.8% Gross profit 426.8 480.1 -11.1% Gross margin 58.2% 59.0% -0.8ppt Operating (loss)/profit (7.1) 7.8 N/A Operating margin -1.0% 1.0% -2.0ppt (For the year ended 31 December) Turnover of Other Brands busines
Slide 21: Outlook
Outlook DAPHNE INTERNATIONAL HOLDINGS LIMITED HBARARER AR AA
Slide 22: Update of Strategic Business Plan
Update of Strategic Business Plan 2016 - 2019 2016 2017 2018 2019 and Stablisation Transformation Transformation and onwards Transition to Sustainable Growth Growth •Clear the baggage •Build the foundation •Analyse and learn - Stores to suit the new retail from the market - Inventory economy respons
Slide 23: Progress and Next Steps: Brand Image
Progress and Next Steps Item Progress made in 2017 Next Step Brand Image • Launched new logo and new brand Will broaden its reach to more identity in Q2 2017 consumers as the plan for store renovation and opening of new • Designed and opened new image stores image stores continue in 2018 23
Slide 24: Progress and Next Steps: Brand Marketing
Progress and Next Steps Item Progress made in 2017 Next Step Brand • First wave of crossover projects rolled Continue the crossover with Marketing out – “Opening Ceremony”, a hip and “Opening Ceremony” for spring & cool U.S. fashion brand summer collections 2018 • Shifted the emphasis to online
Slide 25: Daphne x Opening Ceremony: Launch Event
DAPHNE X OPENING CEREMONY - Launch Event - Aug 2017 • Shanghai Times Square 25
Slide 26: Daphne x Opening Ceremony: Pop-up Stores
DAPHNE X OPENING CEREMONY Aug – Oct 2017 - Pop-up Stores - Shanghai Times Square, Global Harbour 26
Slide 27: Daphne x Opening Ceremony: Media Coverage
DAPHNE X OPENING CEREMONY - Media Coverage - TV station Fashion official account Financial media 27
Slide 28: Daphne x Opening Ceremony: Fashion KOL Endorsements
DAPHNE X OPENING CEREMONY - Fashion KOL Endorsements - Mizuhara Kiko: Model, actress Eve Zhang: Model, KOL Yvonne Ching: Fashion blogger Sophia Shao: Model, fashion blogger Weibo followers: 2.85 million Weibo followers: 5.83 million Weibo followers: 3.24 million Weibo followers: 3.23 million Zhang J
Slide 29: Progress and Next Steps: Product Upgrade
Progress and Next Steps Item Progress made in 2017 Next Step Product • Autumn and winter collection 2017 Analyse sales data and customer feedback Upgrade included the first batch of shoes designed during 2H17 to prepare the 2018 autumn by the energised shoe design team and winter collections • Mad
Slide 30: Progress and Next Steps: Sales Channel Development
Progress and Next Steps Item Progress made in 2017 Next Step Sales Channel • Optimise the retail network with Accelerate strategic opening of new Development selective openings and closings image stores of non-performing stores Improve cost efficiency in building new • Channel mix adjustment to
Slide 31: Progress and Next Steps: E-commerce Business
Progress and Next Steps Item Progress Made in 2017 Next Step E-commerce • Improved the online shopping Continue the pursuit of omni-channel by enabling Business experience, including enhanced more interactions between online and offline and image of online stores, product improve the related effic
Slide 32: Progress and Next Steps: E-commerce Business (cont'd)
Progress and Next Steps Item Progress Made in 2017 Next Step E-commerce • Introduced the shop-pick-up Build relationship with online customers (e.g. more Business service for online orders frequent communication) Continue to improve the online shopping experience by : - Adding exclusive styles a
Slide 33: Progress and Next Steps: Customer Relations Management
Progress and Next Steps Item Progress made in 2017 Next Step Customer • Completed the first round of Launch the 2nd round of upgrade by Relations upgrade with its updating of strengthening the recruitment of members: Management customer data, and new - Simplify the joining process by partnering (“
Slide 34: Transition to Sustainable Growth
Transition to Sustainable Growth The Group saw 2017 a transition year for its transformation steering towards a pathway to sustainable growth Efforts of major initiatives were only reflected at customer touch- points in autumn and winter seasons in 2017 Awards in 2017 (women’s footwear category)
Slide 35: Target Vision
TARGET Revive the growth path and achieve turnaround ASAP VISION To be the most popular mass-fashion brand with leading market share and customer reputation , whilst creating superior shareholder’s return 35
Slide 36: Thank You
Thank You Q&A session 36
Daphne International Holdings — FY2017 Earnings Presentation on 6ix