Source of this article: Times Finance Author: Zhou Jiabao
Picture source: Xtep official
Xtep, which is running, has slowed down its sprint.
html On August 20, Xtep International (1368.hk) released its results for the first half of 2024. As of June 30, Xtep Group's revenue was 7.203 billion yuan, a year-on-year increase of 10.4%; the gross profit margin increased by 3.1 percentage points to 46%; the profit attributable to the company's common stock equity holders increased by 13.0% year-on-year to 752 million yuan; operating profit margin It increased to 15.2% from 15.1% in the same period last year; the net profit margin was 10.4%.On the day when the semi-annual report was disclosed, Xtep International’s share price closed up 4.53% to HK$5.08 per share. Since the beginning of this year, Xtep International’s share price has increased by 17%, with a total market value of HK$13.434 billion.
Such achievements are hard-won. In a telephone exchange meeting on August 20, Yang Lubin, chief financial officer of Xtep Group, said frankly that marathon events in the Chinese market have recovered strongly. Xtep Group’s strategy of focusing on running has supported performance growth, but the market still faces considerable challenges. “Review In the first half of 2024, the domestic economy continues to face uncertain development, and consumer sentiment has been weak, which has also affected the development of the company's brands to a certain extent. "
Judging from the performance of Xtep Group's brands, there are mixed results.
In the first half of this year, Xtep’s main brand revenue increased by 6.6% year-on-year to 5.789 billion yuan; operating profit was 1.190 billion yuan. The revenue of the professional sports segment where Saucony and Mele are located increased by 72.2% year-on-year to 593 million yuan, with operating profit of approximately 23 million yuan.
However, K-Swiss and Paladin, which belong to the fashion and sports sector, have hindered Xtep Group. The fashion and sports segment in which they belong has a net loss of 104 million yuan.
This year, Xtep Group’s “cost reduction and efficiency improvement” has become more and more obvious.
Yang Lubin revealed at the exchange meeting that due to the decline in domestic interest rates and the increase in Hong Kong interest rates, Xtep International has gradually applied to remit money to Hong Kong since last year to pay off Hong Kong loans. “We have already paid off the loans in the first half of this year. It is expected that all Hong Kong loans of more than 1 billion will be paid off within this year to reduce interest expenses. "
In terms of channels, Xtep Group has also taken the initiative to slow down its expansion, mainly focusing on upgrading the image of existing stores." "Open big stores, close small ones" strategy. As of June 30, Xtep’s main brand had a total of 6,578 adult brand stores in mainland China and overseas.
When talking about the strategy for the second half of this year, the management of Xtep Group was more cautious.
Times Finance learned from the exchange meeting that in the second half of the year, Xtep Group will implement more stringent control of key indicators such as expenses and inventory, and proactively adjust the sales pace.
But management is still worried that the main brand may face certain pressure. Yang Lubin revealed at the exchange meeting that "the main brand Xtep's lifestyle products, especially clothing products, will have certain sales pressure, but driven by the growth of running products and children's products, it is expected to still have a certain growth , but our tentative goal will be relatively conservative to avoid excessive inventory.”
Even for brands such as Saucony with the highest growth rate, management also stated that store openings will not be based on quantity, but on high-end stores. The main strategy is to open large stores in first-tier cities. At the same time, it pays more attention to indicators such as store efficiency and channel health. Mele, on the other hand, chose a lighter model and focused on fast response online.
In response to the increasingly fierce competition in the online market in the future, Xtep Group told Times Finance that it will further improve its refined operation capabilities and rapid response capabilities of the supply chain, separate online products from offline products, conduct misaligned operations, and avoid head-on conflicts. .
Overall, Xtep Group chose the latter in the multiple-choice question of scale and profit.
Yang Lubin pointed out: "In the past period of time, our profit margin has been increasing, and the profit margin will be the same this year, so we have always emphasized that profit growth will be faster than the growth of sales costs."
At the beginning of this year, Xtep Group set its revenue Full-year performance guidance of 10% growth and profit growth higher than revenue growth. At the performance meeting, Xtep Group management adjusted this goal.
“Sales in 2024 may not reach the target set at the beginning of the year, but there should still be some growth.While we will strictly control expenses in the second half of the year, we expect that our profit target for the full year will still be able to achieve a growth of more than 20% set at the beginning of the year. Yang Lubin said.
Xtep Group Chairman and CEO Ding Shuibo said in the 2024 interim results report: "Looking to the future, we will be committed to adopting a conservative operating policy."
At the exchange meeting, Ding Shuibo said bluntly, "Environmental There are still many challenges. We believe that if companies want to go long term, they should choose different strategies based on actual conditions. At the moment, we still have to focus on stability and health. ”
He also said, “Since we are in this industry, we must improve the overall sophistication and operational capabilities. When the time is good, if you don't do it well, there is no way you can get out. Similarly, no matter how bad the market is, some brands will stand out. So I believe that as long as we stay focused, we can survive the economic cycle. Especially in the sports sector, we are still very confident. "
