Daphne'S Losses Intensified, But Inventory Returned To Its Health Level.

Business has never been an easy task. In order to regain the consumer, Daphne cleaned up its inventory in 2018, launched an upgraded shop, CO operated with the designer brand OpenningCeremony and Zhou Bichang, and opened the store to the shopping center, but these measures haven't yet brought a significant turn for Daphne.

Daphne group's latest report shows that in fiscal year 2018, the turnover of the company was HK $4 billion 120 million, down 20.8% from the same period last year. Operating losses have increased gradually, from HK $688 million in fiscal 2017 to HK $787 million. The number of core stores (shoe and Daphne brand) was further reduced to 2648, including 2404 Direct stores and 244 franchised stores.

As an important part of Daphne's diversified development, sales of its e-commerce business and high-end brand business, including Daphne group's proprietary brand and exclusive distribution brand, also dropped by 20.6% to HK $583 million. Last year, the company also opened the first offline store for Shanghai's "Circular" brand, which was only sold on the electricity supplier last year.

The only good news is that Daphne said in its earnings report that by cleaning up the seasonal products, the company's stock situation returned to its health level. The adjusted brand marketing strategy also helped increase the flow and sales volume of young customers. The 941 stores that were shut down in 2018 helped to clear up the loss shop.

Referring to this year's plan, Daphne said it will continue its spanformation measures and will be more intense.

Future product upgrading is still one of the key initiatives. Fashion and comfort are the two main directions of the product. In addition to the introduction of new products, it will expand product categories to seize more business opportunities. It will also look for new manufacturers that can achieve quick response production, determine production quantities according to market reaction, avoid inventory backlog, optimize logistics distribution system at the same time, realize automatic replenishment of inventory and integrate regional warehouses to shorten delivery time.

In addition, Daphne acknowledged in its earnings report that thousands of self run shops made up of large scale expansion had created "heavy assets" in business mode. To mitigate risks, Daphne plans to introduce partner system.

The electricity supplier sector will also have more power to work closely with Daphne product design and supply chain departments to launch products that are more popular with online shopping customers from the source and invest more resources in collaboration with social media and e-commerce partners. In the spanformation, the electricity supplier sector has been the leader of Daphne's heavy expectations. Compared with the slow spanformation of the store system, the electronic business platform can convey a new image to Daphne at the first time.

In 2019, Daphne will also work with a brand consultancy to adjust its brand marketing strategy and focus on social media marketing. The company will continue to promote implantable products and help its products get more exposure in the media.

Whether the new initiatives in these plans can really help them complete their spanformation and improve their performance, in fact, Daphne itself has no bottom. "The uncertainty of the global economy and the slowdown in China have hindered the group's business spanformation in 2018, and it is becoming more and more challenging to keep up with the intensifying market competition and the increasingly complex consumer demand." It wrote in its earnings report.