Daphne International Holdings Limited · HKEX:210
Daphne International — H1 2018 Earnings Presentation
30 slides from Daphne International's earnings presentation, August 2018
Slide 1: 2018 Interim Results Presentation
2018 INTERIM RESULTS PRESENTATION AUG 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: 1H 2018 Business Highlights
1H 2018 Business Highlights Affected by the intense market competition and decreasing foot traffic in physical stores, there was no solid sign of recovery in mass women’s footwear market The Group continued its efforts to implement transformation initiatives Brand revamp Opened new image store
Slide 4: 1H 2018 Performance Highlights
1H 2018 Performance Highlights Group sales decreased by 17.3% YoY, slightly less than the reduction of total POS (-25.9% YoY) Gross margin decreased by 7.9ppt to 47.8% Operating expenses reduced by 9.1% Continued inventory optimisation: Inventory level reduced by 23.0% to HK$960.3 million an
Slide 5: Financial Review
Financial Review
Slide 6: Group Financial Highlights
Group Financial Highlights (HK$ million) 1H 2018 1H 2017 Change Turnover 2,259.0 2,732.7 -17.3% Gross profit 1,080.2 1,522.0 -29.0% Operating loss (489.7) (205.2) +138.6% Loss attributable to shareholders (492.6) (209.5) +135.2% Basic loss per share (HK cents) (29.9) (12.7) +135.4% Interim dividend
Slide 7: Group Turnover Breakdown
Group Turnover Breakdown 1H 2018: HK$2,259.0 million 1H 2017: HK$2,732.7 million 14% 14% 86% 86% Core Brands Business Other Brands Business 7
Slide 8: Group Gross Margin
Group Gross Margin Group gross margin decreased by 7.9ppt YoY, mainly due to: - Increased weighting of aged stocks in the sales mix, as a result of the enhanced efforts in clearance of old products - The stable pricing policy on new products failed to offset the negative effect brought by stock cl
Slide 9: Group Operating Expense
Group Operating Expense Decreased by HK$159.8 million (-9.1% YoY) (HK$ million) 3,000 2,667.2 2,670.7 2,500 2,182.1 -9.1% 2,000 1,751.9 1,592.1 1,500 1,000 500 0 1H2014 1H2015 1H2016 1H2017 1H2018 9
Slide 10: Group Operating Profit Analysis
Group Operating Profit Analysis Group gross margin decreased by 7.9ppt YoY Group operating margin dropped by 14.2ppt YoY (HK$ million) 0.0 -100.0 -200.0 (205.2) -300.0 -400.0 +23.0 +134.3 -500.0 (489.7) -600.0 -700.0 -441.8 1H2017 Decline in Decrease in Decrease in 1H2018 operating loss gross pr
Slide 11: Inventory Level and Turnover
Inventory Level and Turnover Group average inventory turnover was 169 days (1H 2017: 200 days) Group inventory level continued to decrease to HK$960.3 million, a reduction of HK$286.6 million, as compared to that of 31 December 2017 After reviewing inventory level, the Group made provision for
Slide 12: Working Capital and Capital Expenditure
Working Capital and Capital Expenditure Capital expenditure increased by 51.9% YoY 1H 2018 1H 2017 Change Average Inventory Turnover (days) 169 200 -31 Average Debtors Turnover (days) 15 15 - Average Creditors Turnover (days) 113 138 -25 Cash Conversion Cycle (days) 71 77 -6 Capital Expenditure (H
Slide 13: Other Key Financial Indicators
Other Key Financial Indicators The Group maintained its net cash position As at 30 Jun As at 31 Dec Change 2018 2017 Cash and bank balances (HK$ million) 374.9 486.3 -22.9% Bank loans (HK$ million) 156.9 156.3 +0.4% Equity attributable to shareholders (HK$ million) 2,365.5 2,874.9 -17.7% Current r
Slide 14: Operational Highlights
Operational Highlights
Slide 15: Group Sales Network
Group Sales Network Number of Points-of Sales (POS) of the Group 4,570(-330) 278(-24) 3,836(-734) 247(-31) 3,386(-450) 213(-34) 4,292 (-306) 3,589 Core Brands had a net reduction of 416 (-703) 3,173 POS, bringing the total to 3,173 (-416) Other Brands had a net closure of 34 POS 30 Jun 2017 31 D
Slide 16: Core Brands Sales Network
Core Brands Sales Network Net reduction of 416 POS (including 394 directly-managed stores and 22 franchised store) Number of POS As at 30 Jun As at 31 Change % Change As at 30 Jun Change % Change 2018 Dec 2017 2017 Directly-managed POS 2,909 (92%) 3,303 (92%) -394 -11.9% 3,987 (93%) -1,078 -27.0%
Slide 17: Core Brands Sales Network (cont'd)
Core Brands Sales Network (cont’d) Maintained greater representation in lower tier cities As at 30 Jun 2018 As at 31 Dec 2017 Change % Change No. % No. % Tier 1 Cities 330 10% 364 10% -34 -9.3% Tier 2 Cities 750 24% 877 25% -127 -14.5% Tier 3 Cities 605 19% 680 19% -75 -11.0% Tier 4-6 Cities 1,488
Slide 18: Core Brands Business - Performance
Core Brands Business - Performance (HK$ million) 1H 2018 1H 2017 Change Turnover 2,080.5 2,465.1 -15.6% Gross profit 894.1 1,294.9 -31.0% Gross margin 43.0% 52.5% -9.5ppt Operating loss (481.9) (191.1) +152.2% Operating margin -23.2% -7.8% -15.4ppt Turnover of Core Brands Business decreased Oper
Slide 19: Other Brands Business - Performance
Other Brands Business - Performance (HK$ million) 1H 2018 1H 2017 Change Turnover 313.0 380.9 -17.8% Gross profit 173.6 222.0 -21.8% Gross margin 55.5% 58.3% -2.8ppt Operating (loss)/profit (5.7) 4.1 N/A Operating margin -1.8% 1.1% -2.9ppt Turnover of Other Brands Business E-commerce increased i
Slide 20: Outlook
Outlook
Slide 21: Customer Centric Strategy
Customer Centric Strategy 品牌營銷 Brand Marketing 產品升級 Product Upgrade Customer Relations Management Retail Channel & Service E-commerce 21
Slide 22: Brand Marketing
Brand Marketing Progress made in 1H 2018 Next step • Successfully launched its spring and • Launch crossover collection summer collections under the crossover with Opening Ceremony • Develop integrated marketing through cooperation with KOL in campaign to promote through online online marketing and
Slide 23: Product Upgrade
Product Upgrade Progress made in 1H 2018 Next step • Continued to cooperate with well- • Enhance the proportion of trendy known IP to provide customers with products and those made of new diverse product offerings materials for 2018 autumn and winter seasons • Increased the weighting of athleisure p
Slide 24: Sales Channel Development
Sales Channel Development Progress made in 1H 2018 Next step • Continued with store network • Plan to open more new image stores optimisation in prime cities in 2H2018 • More stores were renovated in 1H • Continue store renovation to tap more 2018 to strengthen new brand image consumers by increasin
Slide 25: E-commerce Business
E-commerce Business Progress made in 1H 2018 Next step • Remained profitable and increased its • Further increase e-commerce’s contribution to the Group’s turnover contribution to the Group’s turnover • Some of its stores under Core Brands • To have more stores connect to “Tmall’s Smart Store” syste
Slide 26: Customer Relations Management (CRM)
Customer Relations Management (CRM) Progress made in 1H 2018 Next step • Continued to engage members • Conduct an in-depth analysis of the through online platforms and social data of its members to achieve: media - Better forecast of market trends and • Continued to expand membership customer prefer
Slide 27: Looking Back, Moving Forward
Looking Back, Moving Forward • There remain uncertainties during business transformation • The Group will pay continuous attention to the market and make timely adjustments to resume growth as soon as possible • The sales of Core Brands Business saw slight improvement trend with the successful launc
Slide 28: Target Vision
Target Revive the growth path and achieve turnaround ASAP Vision To become the most popular mass-fashion brand with leading market share and customer reputation, whilst creating superior shareholder’s return 28
Slide 29: Thank You
Thank You
Slide 30: Daphne International Holdings Limited
DAPHNE INTERNATIONAL HOLDINGS LIMITED BR MAR BR AR AA
Daphne International Holdings — H1 2018 Earnings Presentation on 6ix