EEKA Fashion Holdings (3709) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 decreased by 1.03% year-over-year to RMB3,306.37 million, with net profit dropping 36.03% to RMB282.85 million due to higher operating expenses and lower market demand.

• Gross profit margin improved to 76.30% from 75.26% year-over-year, despite a slight revenue decline, as cost of sales fell by 5.18%.

• E-commerce revenue grew 17.82% year-over-year, offsetting declines in self-operated retail (-3.67%) and distributor channels (-11.72%).

• No interim dividend was declared for the period.

Financial highlights

• Net cash inflow from operating activities was RMB451.83 million, down 50.60% year-over-year.

• Basic earnings per share fell to RMB0.41 from RMB0.66 year-over-year.

• Operating expenses rose 9.15% to RMB2,272.42 million, mainly due to higher staff costs and increased investment in promotions and R&D.

• Gearing ratio increased to 14.35% from 11.26% at year-end 2023.

Outlook and guidance

• Management expects continued economic uncertainty and downward pressure in China for the second half of 2024, but anticipates that government stimulus policies will gradually stabilize and improve the consumer market.

• The group will focus on quality improvement, brand building, product upgrades, channel optimization, and supply chain integration to drive growth.