361 Degrees International, a Chinese sports brand chiefly targeting small-town consumers, saw its sales tumble by 11 percent to 4,950.6 million yuan renminbi (€610m-$796m) last year. As the company simultaneously invested in marketing and a range of measures to improve sell-through at its franchised stores, its net profit shrank by 37.7 percent to RMB 715.2 million (€88.2m-$114.9m) for the year.
Unlike many other brands operating in China, 361 Degrees lifted the number of its stores to 8,082 by the end of last year, up from 7,865 stores at the end of 2011. About 72 of them are situated in third-tier and smaller cities where the brand has its strongest consumer base. However, the group has refrained from setting any targets for store openings this year.
The company continued to enjoy an increase in comparable store sales last year but it deteriorated from a rise year-on-year of 6.5 percent in the first quarter to 5.1 percent in the second quarter and 4.1 percent in the third quarter. The comparable store sales increase rebounded in the last quarter, up by 4.3 percent year-on-year.
361 Degrees said that it worked to control inventories at the retail level by agreeing with its distributors to cancel some of the orders placed at trade fairs for products that had yet to come out of the factory. Retailers were also supported with training and rack subsidies - an investment by the company to improve the in-store displays of its brand and the support provided by store staff.
In another effort to push sell-through, the group got 63.3 percent of its franchised stores to adopt an electronic point of sale system linked to its head office in Xiamen. It also supported the 361 Degrees brand with an extensive marketing campaign and stronger sponsorship of sports events than before.