Daphne Weighs Ahead: Revenue Fell 38% Days, Closing Three Stores

Four consecutive years of loss, only electricity supplier business profits, Daphne weighs ahead.

Today, the number of Daphne stores is less than 1/3 of its peak.

36 krypton learned that in August 27th, Daphne International (hereinafter referred to as Daphne) announced its mid 2019 performance report. As of June 30, 2019, Daphne's operating income was HK $1 billion 403 million, down 37.9% compared with the same period last year, and its gross profit was HK $651 million, a decrease of 39.7% compared to the same period last year. Its core brand (Daphne, shoe cabinet) sales fell 38.4%, to HK $1 billion 281 million.

In the earnings report, Daphne said that this was mainly due to the drop in stores and sales in the same store.

In addition, Daphne also mentioned that during the reporting period, the gross profit margin of core brand business decreased from 43% in the first half of 2018 to 42.5%, due to the negative impact of loss from shops operating at high fixed cost structure and poor performance. Operating profit margin fell 4.8%, -28.0%.

It is worth noting that Daphne mentioned in its earnings report that the group's e-commerce business continued to increase its contribution to the group's total turnover and maintained profitability during the reporting period, but the profitability of the electricity supplier business failed to reverse the decline of the entire group.

Sky eye shows that the Daphne International Holdings Ltd was founded in Hongkong in 1987. It is a diversified business group mainly engaged in R & D, production, processing and sales of shoes. Its main business is OEM. In 1995, Daphne listed on the Hong Kong Stock Exchange; in 2004, Daphne created second private brand "shoe cabinet"; in 2006, Daphne entered Taiwan market; in the same year, Daphne entered Tmall and built a self operated e-commerce provider.

It was not until 2012 that during the period of Daphne expansion, the number of Daphne stores reached a peak. The total number of outlets and franchisees was 6881. According to this semi annual report, Daphne has a total of 2208 stores, which is still less than 1/3 of its peak.

In order to cope with the sustained loss of performance since 2015, Daphne began to close the loss shops, save costs, and tilt more resources to the relatively good stores. On the other hand, according to the associated business network, Daphne has been expanding its direct proportion to the end of 2018, which has reached more than 90%. Although this heavy asset mode is conducive to the unified allocation and strengthening of supply chain management, it also increases the burden on enterprises in the wake of the decline of Daphne's performance.

Daphne in distress is also changing.

In the electricity business, Daphne settled in Tmall early and began to operate its own e-commerce platform. But in 2010, Daphne and Baidu invested in the electronic business platform, "Yao point 100", and compressed the development of self operated electric business, but ultimately, the investment ended in failure.

On the brand image, Daphne's inventory cycle has been rising all the way, from 128 days in 2010 to 188 days in 2012. In this reporting period, the average stock cycle of Daphne is 195 days, which has been regarded as a fairly high figure. In reducing inventory, Daphne joined the Dangdang products in 2013, often appearing in the form of discount, which easily obscure consumers' cognition.

In consumer shopping habits, more consumers tend to be integrated shopping centers. The attraction of traditional street stores and stores is not as attractive as before. Therefore, Daphne said in its earnings report that during the reporting period, new image shops have been opened in shopping mall channels and shops have been renovated.

Another object that can be used for reference is BELLE. 36 krypton reported earlier that BELLE was also experiencing a huge test of the new business environment before it completed privatization in 2017. Due to the impact of the electricity supplier, its brand performance has declined continuously, which is similar to Daphne's dilemma. Today, BELLE is implementing the digitalization of the whole process, making the data itself the productivity of the company's development.

In addition, Daphne said in its earnings report that it will cooperate with professional brand consulting companies to relocate Daphne brand. Before finding the right location, Daphne will still be weighed ahead.