Kappa Business Growth Of Nearly 50%, Deepen Business Model Sustained Improvement.

Sports fashion brand Kappa parent China trend (Group) Co., Ltd. (hereinafter referred to as "China trend") during the reporting period, the company's Kappa brand store (excluding Kappa children's clothing business and Japanese business) has achieved an annual growth of 10% to 20% low in the retail sales of the entire platform, of which the number of units in the offline business has increased, and the electricity business has achieved 40% - 50% low segment growth.

China's trend indicates that the Kappa brand stores (excluding Kappa children's clothing business and Japanese business), which had been in operation at the beginning of the same quarter, were calculated in the third quarter of fiscal year 2019-2020. Among them, the number of low and medium units has declined, and the electricity business has achieved a low growth rate of 40% - 50%. The 2019/20 fiscal year of the entire platform has increased the number of units in the same store sales year by year. Among them, the number of low and medium units has declined, and the electricity business has achieved a low growth rate of 40% - 50%.

As of the third quarter of December 31, 2019, the number of Kappa brand shops was 1186 (excluding Kappa children's clothing business and Japanese business), compared with 23 in March 31, 2019 (end of 2018-2019 fiscal year). Next, the group will continue to intensify its efforts to close inefficient shops.

Through in-depth reforms in channels, products and supply chain management, China's Kappa brand business has achieved the expected results. China's trend indicates that the current growth momentum of sales mainly comes from the development of channel side, while the same store performance fluctuates due to unstable product performance. According to the channel attribute, the business performance of OLE channel and shopping center grew steadily. According to the division of business structure, the indicators of the electricity supplier business and some sales areas are excellent. At the same time, through the completion of the support of the "direct operation" mode, the group has achieved initial results in inventory management, and the inventory level has declined.

According to the insiders, with the driving force of sports policy, the sports footwear industry in China from the industry layout in 2002 to the national fitness period ended in the Beijing Olympic Games in 2008, and then to the development plan of each subdivision sports field in 2016, a series of industrial policies have landed to the rapid development of the industry. In 2019, to cater for the Winter Olympic Games in 2022, the State Council promulgated the "opinions on vigorously developing ice and snow sports on the occasion of the Winter Olympic Games in Beijing in 2022", which will bring great opportunities for the development of the ice and snow sports industry and drive the industry to continue to develop with high visibility.

Liu Chang, a Dongxing Securities researcher, pointed out that after experiencing the stock crisis, the surviving domestic brands have been optimized in terms of channels and brands, and also have the strength of sustainable growth. The more successful experience of the head sports brand can be attributed to the optimization and upgrading of channels and brands. In order to improve channels, domestic brands have adopted a series of measures to reduce distribution level, strengthen distributor management, layout online e-commerce, and set up an integrated online and offline operation mode. Anta took the lead in implementing the retail oriented development mode, simplifying the original complex dealer and franchisee system, and setting up the sales management department to manage the large area, making the store management flat and the terminal retail business greatly improved.

In addition, we should also see that the increase in the number of consumers and the increase in the size of the clothing scene, the increase in the price of the consumption promotion, the increase in the price of the whole sports industry and the full growth of the sports industry. Firstly, with the enhancement of the National Health consciousness and the guidance of the national policy, the sports crowd will increase, and the demand for sports shoes and clothing will increase. Secondly, the market will be extended and the incremental market will be opened. The annual consumption of sports shoes and shoes will account for a steady increase in the annual consumption of all kinds of shoes and clothing. In addition, the upgrading of the consumption of the industry will stimulate the price increase.

Generally speaking, sports brand is the core part of the whole industry chain, and it is the most beneficial link for the development of the industry. The sports industry in the future will benefit from the continued prosperity of policies, sports events and product upgrading. The Brand Company will also upgrade its path along the path to product to brand, and high-end brands will continue to take the lead in brand building, expand the market through the luxury products or enhance the professionalization of products, and low-end brands must first upgrade their traditional channels to modern channels. After three upgrading, the differentiation of the industry is more and more obvious. The domestic dual leading products have obvious advantages over other brands in all dimensions and are catching up with international brands quickly.

However, Hong Xueyu, an analyst at Guotai Junan, pointed out that the transformation measures taken by China, including the adjustment of store structure and product mix, the introduction of amoeba mode and the centralized distribution channel, have brought some positive effects to the core sports apparel business of the company, and reflected in its channel performance. Especially in the background of the weaker overall consumption sector in China, China's trend continues to deepen the business mode of "brand + product" and "brand + retail", which has brought continuous improvement to the core sports apparel business in China.