Chinese group Xtep Intl., bolstered by a 32.5 percent sales improvement from its professional sports brands Saucony and Merrell, reported a 9.1 percent increase in H1 operating profit to 1,305 million Chinese yuan (€155.5m) for the six months ended June 30. Net profit attributable to company shareholders rose by 21.5 percent year-over-year to RMB914 million (€108.9m). Gross margin fell by 10 basis points to 45.0 percent.
Total H1 revenues increased by 7.1 percent to RMB 6,838 million (€814.9m). Sales of its mass market-distributed Xtep brand jumped by 4.1 percent to RMB 6,053 million (€721.4m) as the segment’s operating profit rose by 1.5 percent to RMB 1,208 million and gross margin dipped by 30 basis points to 43.6 percent. With approximately 70 percent of its 6,360 branded stores in Greater China and elsewhere in the world considered “new image stores,” Xtep intends to accelerate its retail expansion in shopping malls and outlets and increase its number of large-format doors to improve store productivity.
Meanwhile, total sales from the Saucony and Merrell segment rose by 32.5 percent year-over-year to RMB 785 million (€93.6m). The H1 operating profit soared more than 236 percent to RMB 79 million (€9.4m) from RMB 23 million. But gross margin declined by 160 basis points to 55.2 percent. Saucony, which opened its first concept and urban stores in China last fall, currently has 155 branded stores in the country. The brand’s strategy will focus on expanding its apparel and lifestyle product offerings, with a continued emphasis on running, as it moves forward with additional concepts and flagship stores in high-tier cities.
