Cabbeen Announces 2015 Annual Results

HONG KONG, Feb. 3, 2016 /PRNewswire/ --

Results and Operation Highlights:

Substantial growth in results
- Revenue increased 23.5% to RMB1.36 billion
- Gross profit increased by 35.6% to RMB626.5 million with gross profit margin increased to 46.2%
- Profit for the year grew by 22.1% to RMB287.6 million
- Basic earnings per share increased by 22.1% to RMB0.4
- Proposed a final dividend of HK9 cents per share, the total dividend for the year is HK19.5 cents
  per share. Dividend payout ratio is approximately 40%.

Expansion of retail network
- Number of retail outlets increased slightly to 1,139
- 377 retail outlets have been successfully changed to operate on consignment basis, representing
  approximately 33.1% of total number of retail outlets
- Comparable retail outlets recorded same-store sales growth of 3.2%
- Aggregated total retail revenue generated by all the outlets which were operated by distributors/sub-distributors and the Group's own outlets increased by 5.7% year-on-year

Increase in revenue from e-commerce business
- Started to operate online shops on the Group's official website and other popular e-commerce platforms since June 2015

Financial Highlights:

Cabbeen Fashion Limited ("Cabbeen", the "Company" or the "Group"; stock code: 2030), one of the leading menswear designer brands in China, is pleased to announce its annual results for the year ended 31 December 2015 (the "Year").

During the Year, the Group recorded a revenue of approximately RMB1,356.5 million (2014: RMB1,098.2 million), representing an increase of 23.5% year-on-year. The growth in revenue was mainly driven by the increase in sales volume with an expansion of retail network, same store sales growth, and increase in revenue from e-commerce business. Gross profit for the Year increased by 35.6% to RMB626.5 million (2014: RMB462 million) with gross profit margin increased from 42.1% in 2014 to 46.2%. The increase in gross profit margin was due to the increase in percentage contribution of consignment and retail revenue, given the price of products sold on consignment and retail basis was higher than that on wholesale basis. Profit for the Year increased by 22.1% to RMB287.6 million (2014: RMB235.5 million), mainly attributable to an increase in revenue and gross profit. Earnings per share were RMB0.40 (2014: RMB0.33). The Board has recommended the payment of a final dividend of HK9 cents per share of the Company. Together with the interim dividend of HK10.5 cents per share, the total dividend for the Year is HK19.5 cents per share. Dividend payout ratio is approximately 40%.

Total sales volume recorded an increase of approximately 15% to 7.56 million units. During the Year, comparable retail outlets recorded same-store sales growth of 3.2%, while the aggregated total retail revenue generated by all the outlets which were operated by distributors/sub-distributors and the Group's own outlets increased by 5.7% when compared with that in 2014.

For the retail network, Cabbeen emphasized on enhancing the overall efficiency and profitability of each store, therefore it has adopted a conservative approach in expanding its retail network and established stringent store-opening requirements to increase the success rate of newly opened retail networks. The number of retail outlets of the Group increased slightly by 8.3% from 1,052 as at the end of 2014 to 1,139, with 76% of our retail outlets are situated in second- and third-tier cities in mainland China, as the Group believes there is larger room for growth in those cities. Department store concessionaries, street shops and shopping mall shops accounted for approximately 40.6%, 34.0% and 25.4%, respectively, of total retail outlets as at the end of 2015. During the Year, 377 retail outlets have been successfully changed to operate on consignment basis, representing approximately 33.1% of the Group's total number of retail outlets (2014: 18.1%). In the coming years, the Group plans to gradually increase the number of retail outlets to be operated on consignment model.

On the other hand, as the Company's brand strategy by drawing attention to its brands, broadcasting brand status and marking itself out against its competitors, the Group opened a total of five concept stores with shop area ranging from 500 m² to 1,000 m² as at the end of 2015 for cross-selling all of Cabbeen brands' products with a collection of other lifestyle products. The Group believes concept stores could provide better shopping experience to customers and promote its brand image.

The Company keeps direct communications with its VIP members in order to provide information about promotion events and new product launch. During the Year, retail sales to the Group's VIP members contributed approximately 40% of the total retail revenue.

In view of the rapid development of e-commerce and the emergence of new media as convenient sales channels in recent years has changed the retail industry and customers' shopping behavior, the Group has started to develop its own e-commerce sales channels since June 2015 and established its own online flagship store on popular e-commerce platforms and its official website. During the Year, e-Commence recorded a revenue of RMB133.44 million (2014: RMB45.98 million). Branding is becoming more important for the online market while brick and mortar stores facilitates more direct and personalized customers interaction, which allows the Group to express products and brand characteristics in finest details. Therefore, the Group believes that online and offline retail stores can complement each other. Although e-commerce business may not be a profit driver in the short term, the Group still believes it is an important sales channel for future development.

Commenting on the future prospects of the Company, Mr. Ziming Yang, Chairman of Cabbeen said, "The slowdown of economy in China and intense competition in its fashion retail industry have made 2015 a challenging year. In addition, competition in China apparel industry is keen and we expect that it will continue to undergo consolidation in the near term, but we remain optimistic about the prospects of the industry. We believe there are still tremendous potential to grow for us as the growth in China will continue to be fueled by the increase in consumption across emerging middle-class. Furthermore, we compete more on brand awareness and product quality with reasonable pricing than merely on price or marketing tactics, which contains the real business opportunities to us. We will tap the market potential with our unique status as a Chinese designer brand and our experiences in the Chinese market accumulated over the years.

Looking ahead, we will continue to expand our retail network strategically and increase penetration into markets with rising income level and population. We also plan to open more multi-brand concept stores for promoting brand awareness, consolidating market position and enhancing customers' shopping experience. We will also continue with our multi-brand strategy so as to diversify the source of revenue from different group of customers."

About Cabbeen

Cabbeen is a leading fashion casual menswear company in China, which is principally engaged in the design of apparel, footwear and accessories, brand management and sales of fashion casual apparels. According to China Fashion Association, Cabbeen is a leading Chinese designer brand based on factors including retail revenue, the number of retail outlets and brand awareness. The Group currently owns four fashion menswear brands, namely "Cabbeen Lifestyle", "Cabbeen Urban" "Cabbeen Chic" and "2AM".

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iPR Ogilvy & Mather
Tina Law/ Candy Tam/ Rhonda Leung
Tel: (852) 2136 6181/ 3920 7626/ 3920 7625
Fax: (852) 3170 6606
Email: cabbeen@iprogilvy.com