The news on the going-private transaction came just days after Exceed announced that the number of Xidelong stores in China had been pruned by more than 30 percent since the end of last year, as the brand continues to suffer from lackluster consumer demand. It had 3,301 stores at the end of September, a net decrease of 901 stores since the end of June and 1,608 since last December.
This sharp reduction in the store count is part of the measures taken by Exceed to cope with the over-supply in the Chinese market. The group's chief executive said that the situation should continue to be tough until the end of the year, but the worst times appeared to be over for the sportswear industry in China.
The group's sales diminished by 12.9 percent to 481.8 million yuan renminbi (€58.0m-$79.2m) for the third quarter. That is much better than the decline of 48.8 percent suffered in the fourth quarter of 2012, followed by a collapse of 66.7 percent in the first quarter of this year and 37.6 percent in the second quarter.
Footwear sales dwindled by 10.0 percent for the quarter, down by 5.7 percent in volume and by 4.6 percent in average price, as Xidelong introduced cheaper prices for the mass market. Meanwhile, apparel sales were off by 14.0 percent, as a decrease of 18.2 percent in volume was slightly mitigated by an increase of 5.0 percent in average prices, after the launch of better quality winter apparel.
The company's gross profit margin reached just 27.2 percent, down by 0.3 percentage points compared with the same quarter last year. Its selling and distribution costs were cut by 7.8 percent for the quarter, as Exceed spent more on subsidies to improve Xidelong stores but reduced advertising expenses. The group also inflated its research and development costs by 18.0 percent to upgrade its products. Exceed's operating profit landed at RMB 25.2 million (€3.0m-$4.1m), down by 29.5 percent, and its net profit shrank by 39.5 percent to RMB 18.4 million (€2.2m-$3.0m).
For the first three quarters of this year, sales shrank by 43.6 percent to RMB 1,133.7 million (€136.5m-$186.4m), with declines of 44.9 percent for footwear, 42.5 percent for apparel and 41.0 percent for accessories.
