Exceed Company, which sells the Xidelong brand in China, more than doubled its profits in the fourth quarter of last year as the market situation markedly improved. However, that failed to make up for the paltry performance of the previous quarters, leading to sharp sales and profit declines for the full year.
Sagging demand led to the closure of hundreds of Xidelong stores last year. The number was reduced by more than 37 percent to 3,080 stores at the end of 2013. This had the advantage of decreasing promotional expenses and subsidies for the stores. The costs were also reduced by the smaller average size of renovated stores, down to 74 square meters.
Sales for the last quarter climbed by 32.7 percent to 495.9 million yuan renminbi (€57.17m-$79.55m), driven by a 52.9 percent jump in apparel sales. The gross profit margin remained unchanged at about 27.3 percent but the rising sales strongly pushed profits. The group ended the quarter with net profit of RMB 21.7 million (€2.50m-$3.48m), more than twice the profit in the same quarter last year.
For the full year, sales shrank by 31.6 percent to RMB 1,629.6 million (€187.85m-$261.36m), with declines for all product categories. The decrease was chiefly caused by much lower volumes. Average footwear prices also decreased slightly for the year, down by 2.7 percent, but they advanced by 24.6 percent for apparel due to stronger sales of quality and winter products.
The group's gross margin was down by 1.2 percentage points to 27.1 percent for the year. Its operating profit slumped by 59.2 percent to RMB 94.5 million (€10.89m-$15.16m) while the net profit contracted by 67.1 percent to RMB 65.5 million (€7.55m-$10.51m).
Exceed Company was short on strategic plans and prospects after this rough year, only reiterating its confidence that the Chinese sportswear market will continue to expand in spite of economic constraints. Exceed is still listed on Nasdaq, in spite of an offer made last December by investors around Shuipan Lin, its chief executive, to take the company private. A shareholders' meeting scheduled last month to vote on the proposal had to be adjourned, apparently due to delays in arranging financing for the offer.
