The publicly traded Chinese company Xtep Intl., whose business models consists of its own label for the nation’s mass market and four western brands (K-Swiss and Palladium, globally, and joint ventures for Merrell and Saucony in Mainland China) targeting the premium market, generated a 29.1 percent increase in 2022 total revenues to 12,930.4 million (€1.83b) versus RMB 10,013.2 million.
FY22 operating income rose by 4.9 percent to RMB 1,464.3 million (€206.9m) as net income attributable to shareholders increased by 1.5 percent to RMB 921.7 million (€130.2m). Annual gross margin dropped 80 basis points to 40.9 percent from 41.7 percent in FY21.
Total footwear revenues improved by 30.9 percent year-over-year to RMB 7,760.2 million (€1.1bn) but realized a 190-basis-point decline in gross margin to 40.9 percent. Apparel revenues rose by 26.0 percent year-over-year to RMB 4,896.9 million (€691.9m) and realized a 70-basis-point jump in gross margin to 41.3 percent from 40.6 percent. Meanwhile, accessory revenues were up 38.2 percent for the 12 months at RMB 273.3 million (€38.6m).
Results by distribution channel showed 25.9 percent growth for mass market sales to RMB 11.127.9 million (€1.57bn); a 44.4 percent increase for athleisure products consisting of the K-Swiss and Palladium brands to RMB 1,402.5 million (€198.2m); and a 99.0 percent improvement in sales of the Saucony and Merrell brands to RMB 400.0 million (€56.5m).
At year-end, the group operated 6,313 Xtep branded adult stores; 1,520 largely distributor-operated Xtep Kids doors; 72 K-Swiss stores across Asia-Pacific; 69 Saucony locations; and four Merrell branded stores in Mainland China.
Xtep is “cautious” about the short-term outlook for its athleisure business outside Mainland China but added K-Swiss has made “remarkable progress” with its pilot stores that were opened in 2022. The company is banking on a modified product mix and accelerated store openings in higher-tier cities to unlock the brand’s potential in China.
