China's KAPA opened 507 stores in the first half of the year
China Mobile recently released its interim performance report. The company reported operating income of 1.868 billion yuan, representing a year-on-year increase of 33.5%, and net profit of 722 million yuan, up 9.9% year-on-year.
According to China Dynamics, Kappa's operations in China remain robust. In the first half of the year, sales reached 1.674 billion yuan, accounting for 89.6% of the group's total sales. The gross profit margin was 64.1%, which remains at the forefront of the industry. During the first half of the year, Kappa stores increased by 507, bringing the total number of stores to 3,315.
In the first half of the year, China Mobile received government subsidies amounting to 22.01 million yuan. In comparison, the same period last year saw subsidies of 11.4 million yuan.
The average selling price of Kappa's garments during the first half of the year was 126 yuan, marking a 4.1% increase year-on-year. Total garment sales reached 9.78 million pieces, up 28.2% year-on-year. Footwear averaged 170 yuan per pair, a decrease of 3.4% year-on-year, with total sales reaching 1.7 million pairs, up 26.9% year-on-year.
China Dongxiang's China segment focuses on the wholesale of Kappa-branded products. In the first half of the year, it generated sales revenue of 1.678 billion yuan, an increase of 24.9% year-on-year, accounting for 89.8% of the company's total revenue.
The Japan branch sells sports-related products under the Kappa and Phenix brands, achieving sales revenue of 190 million yuan, accounting for 10.2% of the company's total revenue. On May 1, 2008, China Dongxiang completed the acquisition of a 91% stake in Phenix in Japan. Phenix's main brands include ski and Outdoor Sportswear under Phenix and football, sports, and golf apparel under Kappa.
Clothing is the primary product of the Kappa brand in China, accounting for 73.4% of total brand sales. Footwear and accessories make up 21.9% and 4.7% respectively.
In 2006, with the help of Morgan Stanley, China Mobile acquired the full rights to the Italian brand Kappa in mainland China and Macau, transforming itself from a franchisee to the brand's owner.
Mr. Qin Dazhong, CEO and Executive Director of China Dongxiang Group, is responsible for the group's overall strategic planning and business management. With over 10 years of experience in operating sportswear companies, Mr. Qin joined Beijing Trend as general manager in October 2002 and previously worked at Beijing Li Ning Sports Goods Co., Ltd. from 1997 to 2002.
The company has achieved remarkable success through minimal advertising investment for maximum exposure, adopting a light-asset operational model. By positioning the Kappa brand in sports fashion, the company has excelled in efficient inventory management, shortening the accounts receivable cycle, and effective cost control. Mr. Qin emphasized that under the business philosophy of single-brand internationalization and regional brand diversification, the company will continue to expand its sales network, strengthen marketing strategies, enhance operational efficiency, and maintain its multi-brand strategy. The Japanese market continues to develop steadily. Under the guiding values of confidence, pragmatism, and innovation, Trend Group aims to become the best sports brand management team in China, offering consumers more choices and greater value.
Trend Group originated as a standalone unit of the Li-Ning Group in 2002. In 2005, due to business expansion needs, the Li-Ning Group was spun off and successfully listed in Hong Kong on October 10, 2007. The group currently owns rights to KAPPA in China and Japan, as well as PHENIX, INHABITANT, and XNIX. Among these, KAPPA has achieved remarkable success in the Chinese market, growing 200 times in six years.
Mr. Qin briefly outlined KAPPA's brand success experiences. First, leveraging the crisis faced by the original Italian brand owners, utilizing the international capital market's interest in China, and collaborating with financial investors like Morgan Stanley to acquire the lifetime usage rights of the Kappa brand in the region. This complete ownership not only eliminates the risk of being reclaimed by the brand owner once it matures but also provides sufficient autonomy and flexibility in market operations and brand management. Secondly, focusing on sports fashion rather than professional sports. By avoiding direct competition with major brands like Adidas and Nike, Kappa carved out a niche market for sportswear fashion.
The company also emphasizes channel development and distributor relations, having only 43 distributors nationwide. This selective approach ensures higher profitability and prevents frequent discounting that could harm brand value. Additionally, the company maintains a light-asset operational model, achieving significant results in inventory management and cost control.
Regarding future development, Mr. Qin mentioned that under the philosophy of single-brand internationalization and regional brand diversification, the company will continue to expand its sales network, enhance marketing efforts, improve operational efficiency, and stabilize its multi-brand strategy. The Japanese market remains a key focus for steady growth. Under the values of self-confidence, pragmatism, and innovation, Trend Group aims to build the best sports brand management team in China, providing consumers with more options and greater value.
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