Profit drop hits Xtep stock
Shares of mainland sportswear retailer Xtep International dropped over 5 per cent on the announcement that first-half profit fell by 56.7 million yuan (HK$71.4 million) to 284.2 million yuan.
Shares of mainland sportswear retailer Xtep International dropped over 5 per cent on the announcement that first-half profit fell by 56.7 million yuan (HK$71.4 million) to 284.2 million yuan, mainly due to increased spending in advertising and promotions.
The company put in 267.1 million yuan into advertising and promotional expenses, up 77.8 million yuan from a year ago. That equalled 12.5 per cent of the group’s total revenue, which increased 1.8 per cent to 2.1 billion yuan.
The board recommended an interim dividend of 8.5 HK cents per share.
At 4pm, the stock was trading at HK$3.33.
Like its sportswear peers, the company has been overhauling its distribution model after years of overexpansion resulting in distributors heavily discounting products.
Despite the soft top line numbers, the management said the firm experienced mid-single digit same-store retail sales for the second quarter, in addition to improving wholesale business.