Daphne'S Acquisition Of 40.04% Equity Of Fortune Global Has Been Achieved

On October 30, Daphne International Holdings Co., Ltd. announced that the company, the seller and the guarantor had entered into a sales agreement, and Daphne had conditionally agreed to purchase about 40.04% of all the issued shares of Fortune International Co., Ltd. The announcement shows that all the preconditions contained in the sale and purchase agreement have been reached and implemented on October 30, 2023.

After the completion of the transaction, * * * of Daphne's issued share capital in Fujin International has increased from about 59.96% to * * *, and Fujin International has become a wholly-owned subsidiary of Daphne. The financial performance of the target company and its subsidiaries continues to be consolidated in the Group's financial statements.

Daphne was born in 1987. The company initially contracted for American shoe enterprises. In 2000, it began to operate its own brand stores, including Daphne, shoe cabinet and other brands. In 2009, TPG, an American private equity fund, invested 550 million yuan to become a heavy shareholder of Daphne.

After TPG became a shareholder, one of the major changes to Daphne was the acquisition of 60% of the equity of Fortune International at HK $195 million in 2010, which is the target company in this transaction. Daphne indirectly controlled Aiyi Shoes and entered the field of medium and high-end women's shoes. Fuzhen operated six medium and high-end women's shoes brands, enriching Daphne's product portfolio.

In the second half of 2010, Daphne re integrated the existing business of Fuzhen International, making it possible to achieve coordination benefits and operational benefits among multi brand businesses. By the end of 2011, the Group's total number of business outlets based on the brands represented by Fortune International reached 563. In addition to various measures such as withdrawing from sportswear and focusing on women's shoes market, Daphne ushered in the "* * *" period in 2012, with 6881 stores.

However, the good times are not long. After experiencing multiple disturbances such as family infighting, e-commerce shock and franchisee disputes, Daphne began to lose money and close stores in 2017, falling into a downturn in performance.

By the end of 2020, the company had 242 stores, a decrease of more than 96% compared with 6881 stores in 2012 at the peak. In the financial report of the first half of 2020, Daphne further proposed to "completely withdraw from the physical retail business of medium and high-end brands (including mainland China and * * *) and close all * * * business sales points", that is, the business once belonged to Fujin International.

After many years, Daphne has further acquired the remaining equity of Fuzhen International and formally incorporated it into its command. Does that mean that the former "women's shoes * * *" will return to the "battlefield" of mid and high-end women's shoes?

In recent years, Daphne has gradually transformed from a retailer to a light asset brand dealer, focusing on brand management of franchisees in mainland China and the authorization and distribution of footwear products (including women's fashion shoes and casual shoes) online and offline channels, and its performance has also tended to develop steadily. In the first half of this year, Daphne recorded a revenue of HK $123 million, an increase of 134% over the same period last year; The net amount of * * * was HK $34.54 million, an increase of 81% over the same period last year. As of the first half of the year, Daphne has 110 physical stores and 554 online stores, all of which are authorized by franchisees.

In addition, in 2021, Daphne incubated a new brand of avant-garde design "DAPHNE. LAB" to further promote the group's young transformation. The original intention of the brand is to provide the new generation of female consumers with original fashion items with high quality price ratio, including clothing and shoes. The unit price of the product is between 300 and 2000 yuan. On April 1 this year, the brand opened its first store in Shanghai TX Huaihai.