What Is The Problem Of XTEP'S Marketing?

After a quiet period of time, XTEP returned to public view.

According to the world clothing shoes and hats net, recently,

International (01368.HK) announced that the company expects to use no more than 150 million yuan, the entire channel in 2015 before the production of products, full repo centralized processing.

The repurchase is expected to lead to a year-on-year net profit decrease of 25%~35% for the company as of December 31, 2017.

The move led directly to XTEP International's share price volatility. In December 11th, XTEP's international share price dropped sharply, and the intraday price dropped more than 11%.

XTEP International said in an interview with reporters that this year is the last year of the group's 3 year strategic change. Most of the channels, products and shops have completed the pformation. Buyback will become the final closure of the pformation; the early repurchase products will make the whole channel's product style and shop image more unified, and the whole XTEP's new sports brand image will be integrated; after the repurchase, the shops will sell new products, the profit margins will be higher, and dealers and groups will benefit from it.

However, for XTEP international, what is the problem with its market sales? Let it be determined to produce 150 million yuan to clean up the channel stock and whether it will happen in that year.

It is not yet known how to spend 1 billion yuan to clean up the negative effects of inventory.

Transformation

According to XTEP International's response, the repurchase stock belongs to the final closure of the company's pformation.

In fact, unlike Lining, Anta and PEAK, which are different from the domestic professional sports brands, XTEP's positioning for many years is fashionable, but only in recent years, it has planned pformation.

From 2001 to 2015, Nicholas Tse has always been the brand spokesperson of XTEP, and has sponsored "up to day" for more than 10 years. XTEP has also been bundled with this variety show.

In addition, XTEP has worked with Han Geng, Li Yifeng and other popular young students.

XTEP international spent a lot of money on brand communication and promotion. The advertising expenditure in 2014 was 480 million yuan, while in 2015, advertising expenditure reached 620 million yuan, accounting for 13% of the annual turnover.

Although XTEP International's revenue rose 10% to 4 billion 777 million yuan in 2014, it declined by 9.7% in net profit compared to 895 million yuan in 2013.

This figure makes XTEP CEO Ding Shuibo realize that XTEP needs to be pformed.

With the rise of the middle class, running, cycling and so on have become a national sport. Consumers have higher demand for sporting goods, and professional sports equipment is their first choice.

XTEP has also seen this trend. Since 2011, it has sponsored various marathons. In addition, it has also cooperated with Chi Mei Group to develop deep cooperation in marathon's operation, brand promotion and industrial chain layout.

"From 2015, XTEP's great strategic move is pformation.

The brand turns to a professional strategy with running and fashion as its subsidiary.

In order to match this pformation, XTEP has made the corresponding matching action on the product and the channel.

In addition, XTEP has made a lot of efforts in the diversification of business, such as women's shoes, children's sports products series.

Ma Gang, an expert in sports apparel industry, said.

In an interview with reporters, miss Cindy Lin of XTEP Hongkong said that XTEP had made bold adjustments to the products and changed the international practices of functional products based on technology, starting from the needs of runners.

At the same time, she said, "the flattening of channels will continue to deepen this year. We have built more flagship stores and benchmarking shops, giving consumers a better experience, and also setting an example for dealers to speed up the upgrading of" Sports ".

She noted that O2O, which began in 2016, enhanced cooperation with offline dealers, increased the income of the entire group and optimized channel inventory.

However, in the flash point, Liu Xiang, founder of brand communication planning company, seems to be faced with this problem in the sports market, from professional to easy fashion, from fashion to professional difficulties. XTEP is facing this problem.

"For XTEP, the explosive growth of running, especially the marathon, has provided a good opportunity for its pformation. XTEP also seized this opportunity, so that its pformation is relatively stable, unlike other similar brands, such as the great bird, Kappa and Lining, who have suffered a great deal of labor pains."

Liu Xiang said.

Inventory pressure

In fact, XTEP's pformation is not only a replacement of spokesmen, but also a shift from fashion entertainment to professional sports, and a strategy called 3+ strategy.

First, 3+ strategy is "product +": enhance the added value of products, such as enhancing the professional functions of products, and introducing smart shoes, high-end running shoes and other equipment; secondly, "sports +": expanding the scope of sports business and extending mass sports services; third, "Internet +": cooperation with the main stream Internet platform, the use of big data and O2O, and supply chain optimization.

From the performance of the past two years, XTEP International's sales and profits have been improved, to a certain extent, thanks to the implementation of the "3+ strategy": the flat of the channel and the increase of the proportion of regional principal agent outlets, as well as the growth of store efficiency and the growth of e-commerce sales.

However, there are still a lot of old products before pformation.

Ma Gang believes that XTEP's pformation is not smooth, nor is it successful.

In the first half of 2017, XTEP International's net profit declined.

And the number of XTEP stores is decreasing. In the process of pformation, the conflict between distributors and branding is also an important reason for the closure of stores, because the inventory is relatively large, dealers are basically reluctant to purchase.

Therefore, it can be judged that the channel buyback strategy is also the landing of XTEP's pformation.

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"If XTEP does not buy back the channel inventory, the new product will not be displayed, and the franchisee will not have more capital to enter the new products.

Therefore, XTEP buy back from the channel business, first of all, in order to give more display area to new products, and secondly to provide some more liquidity to franchisees.

Ma Gang said.

Liu Xiang told reporters that XTEP's current buy back should be the last mile out of the fashion movement to the strategic pformation of sports and fashion.

Most of XTEP's stock comes from non professional sports products, which are difficult to digest in sports stores, which is why XTEP is eager to buy back.

At the same time, XTEP's adjustment of children's clothing is also one of its series of moves, because in the fashion children's wear market, sports brand has no advantage, and XTEP layout children's clothing is later than competitors.

150 million yuan repurchase

At the end of 2012, Lining spent more than 1 billion yuan to clean up inventory, resulting in the company's first loss since its listing and also made the company's performance recover after 4 years.

Compared with Lining's precedent, the cost of repurchase stock is visible to XTEP. So where does XTEP buy its backing?

As a listed company, XTEP international forecast in the announcement that this repurchase is expected to lead to XTEP's year-end year-on-year net profit decline of 25%~35% over the year ended December 31, 2017.

However, a relatively positive news is that XTEP's inventory turnover has always been better than that of Lining, Anta and 331 degrees, and the cash flow is relatively healthy. It will not cause huge pressure on the capital chain like Lining because of the stock repurchase channel.

"First of all, there was not a large amount of stock, and the repurchase was aimed at better unified image, not because of the increase in channel inventory.

Stock before repurchase is healthy 4~5 month level, this quarterly report has been disclosed; stock after repurchase is about 4 months.

The average stock of normal retail brands is 4~6 months. "

Cindy Lin has always emphasized that repurchase is for the company's unified image, not because the goods that cannot be sold need to be dealt with.

"Factory stores can completely digest some inventory, but it takes time, and we want to end the pformation and rectification in 2017."

"Repurchase stock will definitely affect XTEP's profitability, and the next test of XTEP is how to deal with these inventory products, and will not affect sales of new products."

Liu Xiang appraise.

However, in Ma Gang's view, the total turnover rate is an important indicator, but this indicator may be distorted.

Because it counts the turnover rate of headquarters or direct battalion inventory, and does not count the turnover rate of channel stock. XTEP's 2016 earnings showed that its average stock turnover time was 51 days, which is 10 days shorter than the current domestic sports Anta.

Therefore, this data should be limited to inventory turnover in headquarters warehouse, while channel inventory is ignored.

This is also an important reason for XTEP to buy back.

"Head office inventory turnover is good, but the channel inventory turnover rate is not optimistic, which shows a problem, that is, headquarters wholesale went out, but the terminal shop did not sell.

In the future, for XTEP, it is necessary to consolidate the achievements of strategic pformation, that is, to enhance the influence of running products, to combine sports marketing and running continuously, and to further strengthen the retail service and support ability.

Make terminal stores run healthy and healthy.

Finally, we should pay more attention to diversification and force children's business.

Ma Gang said.

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