Xtep International Holdings Limited, which operates retail stores in China for K-Swiss, Palladium, Merrell, and Saucony, in addition to Xtep brand stores, reported that retail sell-through growth in the first half ended June 30, including brick & mortar and online channels, increased nearly 15 percent versus the year-ago comparable period. The trend represents a moderation of the growth trends in Q2 after the company reported a 20 percent increase in the first quarter.
The company had forecast high-teens year-over-year growth for the period.
“The Chinese government announced a nationwide relaxation of COVID restrictions in December 2022, which has allowed citizens to resume their normal daily lives in a sustained and orderly manner. China’s total retail sales of consumer goods returned to growth, recording an increase of 5.8 percent year-on-year in the first quarter of 2023,” shared company Chairman Ding Shui Po in a note to shareholders. “Retail sales of the core Xtep brand demonstrated a visible turnaround, achieving a year-on-year growth of around 20 percent in the first quarter of 2023. Although consumer spending slowed in May as the economic outlook took a downturn amid heightened concerns over weak industrial output and record-high youth unemployment, the core Xtep brand maintained its growth momentum in the second quarter, with a high-teens year-on-year increase in retail sales.
The Group said in a release its “solid financial performance in the first half of 2023 is a testament to its resilience, adaptability, and keen understanding of the evolving Chinese market.” The Group’s revenue increased by 14.8 percent to RMB 6.52 billion. Revenue from the core Xtep brand rose by 10.9 percent to RMB 5.43 billion in the first half.
Overall, sportswear reportedly continued to outperform the retail sector in Mainland China during the first half and retail sales of the core Xtep brand continued to show strong resilience. Its high-teens year-on-year retail sales growth in the first half of 2023 was reported as higher than the 8.2 percent year-on-year increase in China’s total retail sales of consumer goods for the period.
The Group’s gross profit margin rose 90 basis points to 42.9 percent of sales in H1 from 42.0 percent in H1 2022.
Operating profit climbed 7.0 percent to RMB 986.6 million and profit attributable to ordinary equity holders of the company increased by 12.7 percent to RMB 665.4 million. Basic earnings per share were RMB 26.4 cents versus RMB 23.5
cents in the year-ago half
The Board has declared an interim dividend of 13.7 HK cents per share, with an option to receive scrip shares in lieu of cash, which is equivalent to a payout ratio of 50.0 percent.
Photo courtesy Xtep
