Bosideng clarified: Down sales in off-season inventory is a reasonable level

Bosideng announced that the Board of Directors expressed its concern over the fact that individual Hong Kong media made reports about the Group and its business inconsistent with the facts yesterday and made clarifications. The group's retail network consists of specialty stores and consignment outlets. During the off-season sales of down apparel, according to industry practices, specialty stores operated by distributors will rent out stores in the form of short-term leases. The consignment outlets of the Group are mainly counters located in department stores. They are generally set only during the peak sales season of down apparel to match the seasonal characteristics of the main products and are consistent with the Group’s flexible sales strategies and stringent cost control measures.

Bosideng pointed out that during the off-season sales of down garments from April to June, the group will assist distributors in handling returns and transfers. This year, we will use products from off-season production from January to March to produce the products for the next fiscal year to save production costs. Therefore, the current demand for logistics is relatively large, and the warehouse has a certain amount of inventory, which is a reasonable level. By July, the group will gradually release products to self-operated stores and distributors, and inventory will begin to roll.

In addition, the return mechanism allows distributors to confirm the percentage of unsold items returned by the end of fiscal year, that is, by the end of March. The return rate is approximately 20% to 25%. On financial settlements, the percentage of returns that can be stated in the contract will not be recognized as sales revenue. In addition, since fiscal year 2010/11, the Group has officially launched a new ordering mechanism for some long-term cooperating distributors with relatively strong capabilities, canceling the terms of the return arrangements, and the relevant arrangements are also clearly recorded in the annual report of the fiscal year. At present, the two methods are two-line parallel.

Bosideng stated that the group has ample funds on hand, and as of the end of March this year, unaudited financial data, the group's net cash is about 2.8 billion yuan.