China Dongxiang Announces Operational Results for Q3 and the First Nine Months of FY2019/20

Accumulated Retail Performance Recorded Sustained Growth

Implementation of Direct-franchise Operation Model Achieved Initial Success

HONG KONG, CHINA - Media OutReach - 17 January 2020 - The leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd. ("China Dongxiang" or "the Company", together with its subsidiaries, "the Group", HKEx stock code: 3818) announces the operational data for the three months ended 31 December 2019 (''FY2019/20 Q3'') and the nine months ended 31 December 2019 (''First Nine Months of FY2019/20'').

For the FY2019/20 Q3, the retail performance of Kappa stores (excluding Kappa kids' apparel business and Japan business) for the overall platform registered a low-teen growth on a year-on-year basis, of which the off-line business recorded a mid-single-digit growth and the e-commerce business recorded a low-forties growth. The retail performance of the overall platform for the First Nine Months of FY2019/20 registered a low-teen growth on a year-on-year basis, of which the off-line business recorded a mid-to-high single-digit growth and the e-commerce business recorded a low-forties growth.

As for the same-store-sales ("SSS"), for the FY2019/20 Q3, in respect of Kappa stores (excluding Kappa kids' apparel business and Japan business) which have been in operation since the beginning of the same quarter the previous year, the SSS for the overall platform registered a mid-to-high single-digit increase on a year-on-year basis, of which the off-line business recorded a mid-to-low single-digit decrease while the e-commerce business registered a low-forties growth. The SSS for the overall platform for the First Nine Months of FY2019/20 registered a mid-single-digit increase on a year-on-year basis, of which the off-line business recorded a mid-to-low single-digit decrease while the e-commerce business registered a low-forties growth.

For the third quarter ended 31 December 2019, the number of retail stores of the Group under the Kappa brand was 1,186 (excluding Kappa kids' apparel business and Japan business), representing a net decrease of 23 as compared with that as at 31 March 2019 (''the end of FY2018/19''). The Group will further reduce the number of stores that recorded unsatisfactory performance.

The performance of the Kappa business has successfully met the Group's expectations through reforms of sales channels, products and supply chain management. At present, the principal driver of sales growth is the development of channels. From the analysis by sales channels, business performance of outlets and shopping centres demonstrated a steady growth. From the analysis by business structure, the key performance indicators of e-commerce business and certain major geographical segments have reached remarkable levels. Meanwhile, a front-end and back-end structure has been completely set up for supporting the ''direct-franchise'' operation model, showing initial signs of improvement in inventory management with a decrease in inventory level.

Mr. Zhang Zhiyong, CEO, President and Executive Director of China Dongxiang, said, "The Group insisted on the implementation of direct-franchise operation model and paid more attention to those crucial and specific measures, including performance enhancement by accelerating localisation of the sales teams in certain regions, pushing through reform of products and sales teams for speeding up inventory turnover of its omni-channel retail network and further reducing inventory level, as well as establishing a competitive complete system model by strengthening its product mix. Going forward, the Group will keep on optimising and upgrading its products by implementing comprehensive reforms."

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China Dongxiang (Group) Co., Ltd. is a leading international sportswear brand enterprise in China which has been listed on the Main Board of the Hong Kong Stock Exchange since 10 October 2007. The Group is primarily engaged in the design, development, marketing and wholesale of branded sportswear in China. Currently, China Dongxiang owns all rights to the internationally renowned Kappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiang completed the acquisition of PHENIX, a Japanese sportswear enterprise. PHENIX is the most popular ski brand in Japan with the largest market share, as well as a well-known brand in the international market.