China Dongxiang says that a clearer positioning and an improved product mix for its online sales channel have helped to raise its sales by 8.9 percent to 650 million yuan renminbi (€86.4m-$97.3m) for the first half of this year. The Chinese sportswear group, which owns Phenix and rights to the Kappa brand in China, Macau and Japan, saw its sales in China rise by 6.8 percent to RMB 506 million (€67.2m-$75.7m) for the six months. The group says the Kappa brand gained recognition due to a campaign around its centenary for which it appointed Dragon-Z, an Asian pop and fashion star, to become its new ambassador. However, a more detailed breakdown shows that sales of the Kappa brand in China were flat, and the increase in Chinese turnover comes from the added Kappa Kids business. Sales in Japan were up  by 17.1 percent to the equivalent of RMB 144 million (€19.1m-$21.6m). The store count increased by 15 to 1,282 Kappa stores at the end of June, including 419 own stores. Online sales surged by 88.7 percent for the six months, yielding a gross profit margin of 60 percent. The whole group's gross margin was down by 0.4 percentage points to 57.2 percent – and that was before an unspecified provision for inventories. Yet its operating profit soared by 42.6 percent to RMB 552 million (€73.3m-$82.6m), and profit surged by 65.2 percent to RMB 479 million (€63.6m-$71.7m). China Dongxiang last year decided to get into investment operations, as a means to complement its business in the increasingly competitive Chinese market for fashion-oriented sportswear.

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