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Shoemaker Daphne Falls on Concern Sales Slowing: Hong Kong Mover

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Sept. 30 (Bloomberg) -- Daphne International Holdings Ltd. slumped in Hong Kong trading, headed for a four-year low, after KGI Securities said the Chinese shoemaker’s sales were “sluggish” in July and August.

Daphne plunged as much as 14 percent and traded 11 percent lower at HK$4.69 as of 2:49 p.m. in Hong Kong, poised for its lowest close since August 2009. The stock was the worst performer on the MSCI Asia Pacific Index, which dropped 1.5 percent. Competitor Belle International Holdings Ltd. fell as much as 5 percent.

Consumer companies are facing slower growth in China, where the economy expanded 7.5 percent in the second quarter from a year earlier, the second straight deceleration. Shanghai-based Daphne last month reported 1.8 percent growth in revenue for the six months ended June, the slowest pace since 2002, according to data compiled by Bloomberg.

“Sales were sluggish in July and August and traffic doesn’t seem to be improving recently,” Flannery Huei-chen, an analyst at KGI Securities, wrote in a report dated Sept. 27, saying Daphne’s investor relation’s department had attended a group meeting and conference call at the firm.

Macy Leung, a spokeswoman at Daphne, didn’t immediately respond to calls and an e-mail seeking comment on the company’s sales.

Shoe sales during China’s “Golden Week” holiday, which extends from Oct. 1 to Oct. 7, may be disappointing as fewer people visit the stores, Bocom International Securities Ltd. said on Sept. 26.

Daphne had 7,054 outlets in China as of June. The company will announce same-store sales data for the third quarter in mid-October, according to KGI. The stock has lost 56 percent this year, compared with 1.2 percent gain for the city’s benchmark Hang Seng Index.

To contact the reporter on this story: Billy Chan in Hong Kong at bchan101@bloomberg.net

To contact the editor responsible for this story: Grant Clark at gclark@bloomberg.net

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