361 Degrees had a strong year. While the Chinese sportswear company made great efforts to develop its business in China, it also continued to actively expand internationally, with a focus on high-end functional running and training products for overseas markets, supported by a dedicated R&D center in Taiwan.
Since 2014, the company has set up wholly-owned subsidiaries in Brazil, the U.S. and Europe, selling 361 Degrees products outright to multi-brand sportswear stores in those regions through local sales teams. In other regions such as Middle East, South America and Southeast Asia, it has opened local 361 Degrees boutiques and sold 361 Degrees products through local distributors. The strategy seems to be paying off: the group's overseas business generated 89.3 million yuan renmimbi (€11.5m-$14.2m) in revenues last year, 10.7 percent more than in the previous year.
The bulk of the company's sales is still coming from China, where its growth rate was lower last year. Globally, its revenues rose by 2.7 percent to RMB 5,158.2 million (€662.5m-$821.4m). The turnover recorded a decrease of 4.3 percent in the second half of the year, as compared with the same period last year, mainly due to the fact that the delivery for 2017 winter trade fair orders was only partially completed.
The number of mono-brand stores was trimmed by 9 percent to 5,808 units, of which approximately 80 percent were stand-alone, street-level stores. The company launched a series of running specialty stores. The e-commerce business accounted for about 7.7 percent of total revenues.
As of Dec. 31 2017, there were also 1,241 points-of-sales in multi-brand sports specially stores carrying 361 Degrees products in Brazil, 1,030 in the U.S., 378 in Europe and 40 in Taiwan. Currently, the European network covers the U.K., Germany, France, Austria and Switzerland.
In 2017, the group also tapped into new markets such as Canada, Russia, Spain, Israel and Italy. The management said it will continue to explore and expand into more countries with growth potential in order to promote its international products in the future. The brand's 361 ? Sensation shoe and its Spire 3 won numerous product awards around the world last year.
The kids division represented 13.8 percent of total revenues. Revenues from footwear and apparel products grew by 4.6 percent and 1.1 percent respectively, whereas accessories decreased by 18.5 percent. Footwear products were the key growth driver, accounting for about 44.7 percent of total revenues. This was primarily due to the group's continuous focus on the development of new footwear products and the contribution from the increased overseas' footwear sales. Sales of 361° Kids grew by 9.2 percent, while revenues grouped under the “Others” category, representing revenues from sales of shoe soles to independent third parties by a 51 percent owned subsidiary, declined by 28.2 percent.
The gross margin contracted by 0.2 percentage points to 41.8 percent, due to increased competition in apparel and an increase in the cost of production in both footwear and apparel. The operating margin inched up by 0.2 percentage points to 19.1 percent. Comprehensive net income jumped by 58 percent to RMB 560.6 million (€71.8m-$89.3m), but excluding extraordinary items, it was up by 11 percent to RMB 467.3 million (€59.8m-$74.5m).
