XTEP'S Growth In The Four Quarter Is Still Slowing Down.

Recently, XTEP International Holdings Limited (hereinafter referred to as XTEP) first issued a fourth quarter forecast in 2018. In the three months ending December 31, 2018, XTEP's average store sales performance (at retail value) was double digit growth over the same period in 2017, which is similar to that of 2018 second and the three quarter.

XTEP releases its latest performance briefing

According to the preliminary evaluation announcement of XTEP's fourth quarter briefing, as at the end of December last year, XTEP's consolidated net profit increased by 50% to 60% over the same period last year.

The expected growth is mainly due to a significant increase in the total revenue by about 25%, and the retail discount rate has maintained a 7.5-8.0 discount level, and the retail inventory cycle has remained at a healthy level for about four months.

Due to the initial success of the pformation, the recovery and upgrading of the brand shops and the optimization of the retail network have proved that the sales performance of the retail stores is strong and the recognition of the products has been improved.

Because of the stock repurchase in 2017, XTEP increased the demand for replenishment stock, increased sales of goods and replenishment needs of suppliers, and promoted sales and profit upgrades.

Subsequently, CICC reported that it was optimistic about XTEP's improvement in retail efficiency and product research and development, and raised its rating to "recommend". The target price also increased by 7% to HK $5.47. For yesterday's (22) closing price, there was still about 21% of the upward space.

The company's revenue growth is expected to exceed 15% in 2019, mainly from the increase in average selling price, channel expansion and store efficiency.

CICC believes that XTEP's revenue rose by about 25% last year, which will become the driving force for the biggest profit growth of the group. It will increase XTEP's earnings per share forecasts in 2018 and 2019 by 11.5% and 11.3% to 0.29 yuan and 0.33 yuan respectively, and the introduction of 2020 earnings per share is expected to be 0.38 yuan, and XTEP's share price jumped 10%.

XTEP's initial success in restructuring

XTEP experienced the initial effect of three years of pformation, and also benefited from Chinese consumers' pursuit of sports and healthy lifestyles. In the mid 2018 report, XTEP's international income was 2 billion 730 million yuan, up 18.1% over the same period last year. Net profit reached 380 million yuan, up 20.9% from the 310 million yuan in 2017.

Among them, footwear business accounts for 64.9%, about 1 billion 770 million yuan, and the contribution of the electricity supplier is more than 20%. It can be seen that XTEP has been optimizing its structure to make changes.

Ding Shuibo, chairman and chief executive of the company, said at the mid term performance conference that XTEP international was interested in developing many brands in recent years and was looking for international sports brands to complement its existing brands.

The specific pformation effect still needs to see the follow-up performance report in 2019.

But the acquisition of international sports brands and the development of high-end lines and other multi-level development seem to be one of the main reform methods of domestic brands.

XTEP and other national cards have undergone a cliff shaped pformation of China's economy. The pricing and design of products can not be greatly improved in a short time, and occupy most of the low-end market. Taking XTEP as an example, the price is from 59 T-shirts to 799 down garments, of which core price is around 100-300, and the risk of giving up the middle and low end market pformation directly like Lining is too high, so it is better to learn Anta from buying high-end brands.

Today's XTEP starts with product change, and at the same time, it creates a sports fashion with many stars. It has also become the official sports brand designated by the new rap official in China. The combination of brand and fashion culture can also be very cool. As the Fujian sports brand, XTEP's road is similar to Anta's. it can look forward to the development after the acquisition of high-end line, which is perhaps the only way for the old brand of domestic sports brand.

The increase of national running to sports market

In addition to strategic layout and channel upgrading, one of the major advantages of the sports market is the "running" series that XTEP and other sports brands are gradually increasing. This is different from the basketball betting basketball sport of Nike, ADI and other brands. These local brands know that running in recent years is one of the national movements rooted in the Chinese market.

From the five kilometre entertainment project of color marathon to the increasingly standardized and nationalized Professional Marathon, running (marathon) is being awakened by the national health awareness, and driven by its convenience and wide participation, it has become a priority sport for the Chinese people.

While XTEP and other sports brands began to promote capital injection running throughout the country, XTEP launched the annual "321 Running Festival" activities since 2016, and many IP activities such as the Beijing Orson ten km timing competition, which played an important role in the leading position of marathon.

In the first half of 2018, XTEP also added a XTEP running club in Xiamen. It is the Fifth National Club outside Beijing, Changsha, Nanjing and Hefei.

The club provides all kinds of running related products and services to these runner.

To cater for the specific needs of runners, products, training, services and offline social activities have created an ecological circle around XTEP brand for the runners, including marathon registration, training courses, foot scan, custom medals and so on, attracting many fans' attention.

To this end, XTEP has also launched exclusive running products for running. Clothing is also seeking to help runners cope with different weather conditions and movement conditions.

Under this circumstance, combined with brand positioning, XTEP and other national cards can be successfully attacked in the stalls of the economic downturn.