The Chinese group Xtep Intl., which took 100 percent ownership in the Saucony and Merrell businesses in China earlier this year, generated 7.9 percent operating income growth in FY23 to 1,579.9 million yuan renminbi (€201.5m) on 10.9 percent annual revenue growth to RMB 14,345.5 million (€1.83bn). The annual gross margin increased by 130 basis points to 42.2 percent from 40.9 percent for the 12 months ended Dec. 31.
All footwear sales rose by 5.3 percent in FY23 to RMB 8,171.9 million (€1.04bn). Apparel sales increased by 20.6 percent to RMB5,903.5 million (€753.1m), and accessories revenues fell by 1.2 percent to RMB 270.1 million (€34.5m). The company’s mass market business, consisting of Xtep branded products, had 7.4 percent higher sales year-over-year to RMB 11,947.4 million (€1.52bn), while total athleisure sales consisting of the K-Swiss and Palladium brands rose by 14.3 percent to RMB 1,602.6 million (€204.4m) but also generated an operating loss of RMB 183.9 million (€23.5m).
Xtep, in its 15th year as a publicly traded company, was forced to contend with weakening consumer confidence and modest GDP growth of 5.2 percent in China last year. It also had a headwind in the form of an underperforming e-commerce business. The company acquired 40 percent of Saucony’s intellectual property rights in China in Dec. 2023 and bought Wolverine Worldwide’s remaining stake in a joint venture formed in 2019 in January, as it transitioned into wholly owned subsidiaries. Saucony sales accounted for 5.5 percent of the group’s revenues last year, or RMB 795.5 million (€101.5m). At FY end, 110 Saucony stores and four Merrell locations were in Mainland China.
