Hong Kong-listed fashion sportswear firm Xtep International Holdings announced a healthy 26 per cent rise in its revenue to 2.57 billion yuan (HK$3.13 billion) for the six months ended June 30.
The company, based in Fujian province, says in its results announcement that revenue from the Xtep brand increased significantly by 29 per cent, reaching 2.45 billion yuan compared with 1.91 billion yuan in the same period the previous year.
With prudent and efficient cost and supply chain management, the group continued the improvement in gross profit margin despite the continuous inflationary environment.
The overall gross profit margin increased to 40.9 per cent, a marginal increase over the same period last year. Profit attributable to shareholders was approximately 466.2 million yuan, an increase of about 25 per cent over the same period last year.
Xtep says the satisfactory results and adequate surplus cash balances have resulted in the board recommending payment of an interim dividend of 13 HK cents per share, an increase of 30 per cent from last year.
With the continued growth of the retail sector, including the sportswear industry, and a special sports and entertainment strategy for the six-month period, the group's total revenue from the Xtep brand products rose by 29 per cent and gross profit margin increased by 0.4 per cent to 40.9 per cent.
The company says the strong results of Xtep brand products were mainly attributable to the widespread recognition of the brand as a result of it sponsoring a number of high-profile international and national sporting events and its special entertainment marketing strategy.
In addition, as a result of the popularity of Xtep brand products among the public, the group has recorded satisfactory sales performance through its expanded sales channels and network.
Due to effective cost inflation control by increasing the amount of inventory purchased and making advanced payment to the outsourcing supplier, the margin for Xtep brand footwear and apparel products has improved.
The company has also benefited from the sports training plan announced by the State Council, which is aimed at raising public participation in sport in the next five years and to encourage society to engage in sports-related businesses.
'The plan includes expanding the budget for nationwide sports activities in cities of every level. Such policies will effectively stimulate the domestic demand for sportswear, thus allowing China's sportswear industry to thrive,' says Ding Shui Po, chairman and CEO of Xtep.
The group entered into a new five-year co-operation agreement with Spanish La Liga soccer club Villarreal, allowing the Xtep brand's logo to appear regularly in the international sporting arena. The group has also become the official partner and sole sportswear sponsor for the China national women's synchronised swimming team and the global partner of the International Horticultural Exposition 2011 in Xian.
During the first half of this year, the group sponsored five major international marathons. The company says about 150,000 participants and millions of viewers were involved in these events, which helped in promoting the Xtep brand.
Adding to the company's celebrity team, comprising Nicholas Tse, Wilber Pan and Jolin Tsai, the group announced that it has also signed Han Geng.
The number of Xtep-brand retail outlets increased by 407 to reach 7,438. The average number of such outlets for the period was 7,235, an increase of 14.1 per cent compared with the same period last year.
The group also had 40 Xtep brand flagship stores. The average wholesale revenue per Xtep brand retail outlet increased by 13.1 per cent to about 340,000 yuan compared with the same period last year. The Xtep brand also became the first mainland sportswear brand to venture into the Taiwanese market, launching its first retail outlets in Taipei.
With the increasing popularity of online shopping among the younger generation, the group has used the pulling power of e-commerce to reach this market and expand its sales network.
Along with its partnership with Sohu.com and Taobao.com, the group signed an agreement in April to form a strategic partnership with www.taoxie.cn , one of the largest footwear sales platforms in the country.
The company says that it continues to strive to enhance its sports and entertainment marketing strategy by introducing new sponsorship campaigns this year. The group will also continue to focus on expanding its running and football sportswear series.
More professional and stylish running shoes will be launched along with a new Villarreal-themed product line.
The amount by which revenue from the Xtep brand increased in the six months to June 30
- Likely interim dividend 13 HK cents a share