China Dongxiang increased 2010 full-year sales by 7.3 percent to RMB 4.26 billion (€460.1m-$649.4m), underpinned by a 15.8 percent rise in Kappa footwear. Shoe sales were lifted by the introduction of new products, such as lightweight running shoes and casual footwear, and an increase in the retail network. The Kappa business accounted for 85.2 percent of group sales, down slightly from 85.5 percent in 2009 as sales of Kappa apparel grew by only 5.5 percent. The number of Kappa stores directly or indirectly operated by the group's distributors increased to 3,751 at the end of 2010 from 3,511 a year earlier. Since the beginning of the year, another 20 stores were opened including the first Robe Di Kappa shop, which was inaugurated in Beijing in February.
The group's online sales were up by more than 300 percent in 2010. Kappa products are available on the Chinese e-commerce site www.taobao.com.
China Dongxiang's gross margin narrowed to 59.7 percent from 60.4 percent and the operating margin slipped to 40.9 percent from 42.7 percent. The net profit was up by 0.3 percent to RMB 1.46 billion (€157.7m-$222.6m). The final dividend was cut to RMB 9.76 (€1.1-$1.5) per share from RMB 12.95 a year earlier. With the interim dividend paid on Sept. 20, the overall dividend is slightly higher at RMB 18.08 (€2.0-$2.8).
Despite a challenging business environment, the group still sees a good prospect for rapid growth in the retail market. It will shift its focus from sell-in to sell-through by providing stronger support to distributors and tightening partnerships with retailers.
