While reporting a steady decline in apparel sales for the first quarter of this year, China Hongxing Sports, the company that markets the Erke sports brand, says it raked in orders worth 504 million renmimbi (€60.0m-$74.0m) for fall/winter at the trade fair held in Xiamen last month, an increase of 14.5 percent over last year. This provides overall improvement for the company’s order book for this year. Footwear made up 49 percent of orders.
The company has reported serious declines in revenues in recent quarters, attributing them in part to the inventory overhang in the Chinese market that followed the 2008 Olympic Games in Beijing, and in part to weak market demand for its products.
For the first quarter ended last March 31, its sales fell by 13.5 percent to 491.2 million RMB (€58.5m-$72.1m). Profit from operations declined by 62.2 percent to 24.5 million RMB (€2.9m-$3.6m), and net profit dropped by 65.2 percent to 19.5 million RMB (€2.3m-$2.9m).
Footwear, which made up 64.4 percent of total sales in the quarter, showed growth of 18.2 percent. However, it couldn’t offset the 45.9 percent decrease in apparel sales. The company said the overall sales drop was related to weaker domestic demand for its products, and a slump in average selling prices.
For the past financial year, the company reported a 30.8 percent decline in revenues to 1,998.8 million RMB (€240m-$294m), with declines of 40.2 percent for footwear, 8.3 percent for apparel and 68.2 percent for accessories. The gross margin fell to 36.9 percent from 39.3 percent in the prior year. Operating income went down by 69.5 percent to 162.6 million RMB (€19m-$24m). Net profit for the year was off by 70.8 percent to 131.1 million RMB (€16m-$19m).