GXG'S Parent Company Issued A Profit Warning That Its Net Profit In 2019 Dropped By About 40% To 45%.

In February 3rd, GXG parent company mosang group issued a profit warning. In view of the adverse macroeconomic environment in 2019, according to the preliminary assessment of unaudited consolidated management accounts held by mosang group for the year ended December 31, 2019 and the information currently available to the group, the net profit margin of the group held for the year ended December 31, 2019 is expected to decrease by about 40% to 45% over the December 31, 2018 period.

The main reasons for this decline are:

The decrease of passenger volume in some business circles resulted in the damage of some offline shops.

In view of the fact that the current retail environment has reduced the level of unsold inventory in its distribution network, the group has led to a one-off inventory loss.

Closure of Direct stores resulted in a one-time loss (including guarantee deduction and depreciation of residual value).

In addition, from 2016 to 2018, the online sales of mousse group grew at a compound annual growth rate of over 35%, and continued to grow in 2019. Moshang group said its expansion of online distribution channels is consistent with the growing trend of e-commerce penetration in the fashion industry. In December 2019, we established a joint venture in People's Republic of China with the aim of promoting a brand new brand with a new style and theme, and laying a solid foundation for our group's future growth.