Sales Of Main Brand GXG Decreased. Online Sales Of Mousse Group Maintained Rapid Growth.

01817.HK released its interim results. In the 6 months ended June 30, 2019, the group achieved a total revenue of 1 billion 686 million 100 thousand yuan (the same below), an increase of 10.6% over the same period last year, a gross profit of 838 million yuan, a profit of 89 million 670 thousand yuan from the parent company, and 0.11 points of basic earnings per share.

The group's revenue mainly comes from selling products to its terminal customers through its own stores, distributors, partnerships and online channels. Group income is accounted for by net sales invoice after deduction of return and trade discount. In the first half of the year, the group achieved total sales revenue of 1 billion 686 million 100 thousand yuan, up 10.6% or 161 million 900 thousand yuan compared with the same period last year. Thanks to the development of the new retail business mode, the group's e-commerce business continued to grow during the period. The company is also committed to further promoting joint market promotion activities to enhance customer loyalty.

On the brand side, the sales revenue of the main brands (i.e. GXG and GXG jeans) decreased, mainly due to (I) the 2019 lunar new year in February 5th, which came earlier than February 16th 2018, while the group usually recorded lower sales data after the lunar new year; and (II) the number of rainy days in the East China region increased two months to February 28, 2019, and the average rainy days in Hangzhou, Hefei, Nanjing, Ningbo and Shanghai in eastern China were 30 days, while the average period in 2018 was 19 days in the same period, which negatively affected the group's sales in the region (one of the main regional markets of the group). Gxg.kids sales revenue increased by 120.2% or 200 million 900 thousand yuan compared with the same period last year.

Therefore, in the group's GXG series, the above changes made the (I) GXG brand sales share decline from 63.9% to 56.9%, and (II) GXG jeans's brand sales accounted for 21.4% from 17.9% to 17.9%, while gxg.kids brand sales increased from 11% to 21.8%. In the group's sportswear brand, Yatlas revenue decreased by 13.7% or 5 million 300 thousand yuan, resulting from the group's adjustment of brand positioning and the reduction of the number of shops to improve the efficiency of the store. Thanks to the increase in e-commerce sales, sales of 2XU and other brands have risen.

In terms of channel, the sales revenue of self operated store is 482 million 200 thousand yuan, the sales revenue of the partnership store is 169 million yuan, and the sales volume of the distribution shop is increased by 58% to 467 million yuan. Online channel sales continued to grow rapidly, increasing by 14.9% to 562 million 400 thousand yuan. In terms of group income, online channel sales account for 33.4% of the total, followed by 28.6% of self run stores and 27.7% of distributors.

In addition, due to market factors such as the transfer of business channels under the line, the rising operating costs and other market factors and the upgrading of the offline channels, the group adjusted its store network in the first half of 2019 to close down the shops that failed to reach the established sales target, so the total number of stores decreased from 2250 at the end of 2018 to 2139 in June 30, 2019.

During the reporting period, the number of outlets increased, while the number of self operated shops and partnerships decreased. The main reason is that the group transfers all offline channels to children's clothing to third party agents, aiming to enhance the group's share in the Chinese children's wear market by taking advantage of the agency.