China’s Xingquan International Sports Holdings Limited swung to a loss before taxes in the fiscal third quarter ended March 31 as sales of its shoes, shoe soles, apparel and accessories plummeted.

The company, which derives all its income from China, reported revenues plummeted 67.1 percent to RMB106.9 million ($16 million) compared with the year earlier quarter, resulting in a loss before taxes of RMB14.3 million (-$2 million), compared with a profit of RMB56.3 million. Excluding the impact of currency exchange, the company earned a profit before taxes of RMB6.3 million ($1 million).

Xingquan is among dozens of Chinese companies that began moving up the value chain in recent years by launching its own domestic brands. It launched the Addnice footwear brand in 2003 and founded Gertop as an outdoor sportswear brand in 2010. It has since re-positioned Gertop as an outdoor casual wear brand and opened a chain of more than 100 retail outlets in a bid to raise average sales prices and margins.

Xingquan’s revenues of RMB556.4 billion ($85 million) and a profit before taxes of RMB300 ($13 million) for the nine months ended March 31, represented declines of 46.1 percent and 72.4 percent respectively. Revenues and operating income declined 7.1 percent and 56.4 percent at its shoe soles segment, 61.3 precent and 55.2 percent at its casual cootwear segment, and 37.6 percent and 54 percent at its apparel and accessories segment that includes Gertop.

While acknowledging uncertainty over the direction of China’s economy that may impact spending by Chinese consumers, Xingquan said “prospects for its financial year ending June 30, 2016 should remain positive due to the success of the Gertop brand” and its shoe sole business. “We will continue to be wary of the changes in the economic conditions.”

Photo courtesy Gertop