Exceed Company Ltd., the owner and operator of the “Xidelong” brand, reported a 37.6 percent decrease in second quarter revenue as a result of weakening consumer demand in China due to the economic slowdown in the country. Revenue from Footwear declined 41.9 percent due to a decrease in sales volume and decrease in the companies footwear average selling price.
The Chinese company makes running, leisure, basketball, skateboarding and canvas footwear, sports tops, pants, jackets, track suits and coats, and bags, socks, hats and caps.
For the second quarter ended June 30, revenue was RMB350.8 million (US$57.2 million), a 37.6 percent year-over-year decrease. Gross profit was RMB95.9 million (US$15.6 million), representing a 40.8 percent decrease from last year's comparable period. Gross margin was 27.3 percent, a 150 basis point decrease from 28.8 percent for the second quarter of 2012.
Operating profit in Q2 was RMB22.6 million (US$3.7 million), down 36.3 percent from last year. Net profit was RMB15.6 million (US$2.5 million), a 48.0 percent year-over-year decrease.
Revenue from Footwear was RMB158.9 million (US$25.9 million) for the second quarter ended June 30, a decline of 41.9 percent from RMB273.3 million for the second quarter ended June 30, 2012. The year-over-year decrease in revenue was primarily due to a decrease in sales volume and decrease in the companies footwear average selling price.
Shuipan Lin, Exceed's founder, Chairman and CEO, commented, “as anticipated, our results in the second quarter continued to be impacted by weakening consumer demand in China, which was largely attributable to the economic slowdown in China. As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue. In response to the prevailing market conditions, we took a prudent approach to control the amount of orders placed by our distributors. In addition, we continue to maximize the efficiency of our distribution network by closing or relocating the inefficient retail selling locations. We believe that these initiatives will help to digest inventory in retail selling locations.”
“While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe that we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen our brand awareness. We believe that there is room for growth in the sportswear market, and we intend to achieve a year on year single-digit percentage increase in sales in the long run.”
Second Quarter 2013 Financial Results
Revenue breakdown
