Xtep International reported revenue growth of 12.4 percent to 4.13 billion yuan renmimbi (€544m-$639m) in the first half of 2021. The gross margin improved by 1.3 percentage points to 41.8 percent and the net profit grew by 72.0 percent to RMB 426.5 million (€56.1m-$65.9m).
The group has completed a multi-faceted restructuring and sees stable economic fundamentals in mainland China as well as robust prospects for the sportswear sector.
The group’s core Xtep brand continued to be a stable growth driver. As of June 30, 2021, there were 6,015 Xtep branded stores, mainly operated by authorized distributors of the group in Mainland China and overseas. Within the last few months, Xtep brand launched the signature “160X” professional series to solidify the brand’s standing in running, tapped the rise of “China chic” and rolled out the new label “XNDA” to introduce fashionable high-end collections. While leveraging various online channels, the company also focused on social media channels such as WeChat mini-programs, Douyin and other live streaming platforms to drive online sales.
According to the report just published, the company plans to drive its store productivity through network optimization, enhanced customer engagement and larger store sizes. Furthermore, the group plans to set up mono-branded stores in China for Saucony, Merrell and Palladium, and to concentrate on K-Swiss’s rebranding process.
The group’s professional sports segment, represented by the Saucony and Merrell brand run under a joint venture with Wolverine Worldwide, experienced a 290 percent sales increase to RMB 75.8 million (€9.97m-$11.69m) in the first half. By June 30, there were 36 and six self-operated stores for Saucony and Merrell in mainland China, respectively, with more store openings expected in higher-tier cities in the second half of 2021.
The restructuring of the K-Swiss brand is still underway, with an opening of its first self-operated store in mainland China expected to take place by early 2022. For an accelerated development of K-Swiss and Palladium, Xtep formed a strategic partnership with their Hong Kong-based parent company, the Hillhouse Group, in June 2021.
