In The Two Quarter, XTEP Grew By More Than 20%, And Thousands Of People Built Teams To Monitor What Consumers Needed.

In July 12th, XTEP International Holdings Limited (hereinafter referred to as XTEP International) disclosed the Chinese business situation in the second quarter of 2019. In the two quarter, the same store sales (at retail value) decreased by double-digit growth over the same period last year. Retail sales (including online and offline channels) increased by more than 20% over the same period last year; the retail discount level was about 7.5-8 fold, mainly driven by the promotion during the Chinese New Year holiday, while the retail discount level and retail inventory turnover were about four months.

Reporters here in the interview learned that the industry believes that the two quarter of XTEP international performance growth is only the average level of domestic sports, lower than Anta and Lining, and in terms of inventory turnover, its data are also general, the current sports brand will not blindly press goods, commodity management also to a new height.

Reporters learned from the earnings report that in the second half of 2018, XTEP international achieved 3 billion 650 million yuan in business revenue, an increase of 30.4% over the same period last year, of which footwear is still the most contributor to revenue, but clothing revenue has increased significantly over the same period and annulus growth. In the whole year, XTEP international revenue reached 6 billion 380 million yuan, up 24.8% over the same period last year. Among them, footwear, clothing and accessories accounted for 61.5%, 36.4% and 2.1% respectively. Annual revenue is at a record high.

XTEP international has made reforms in brand building, channel construction and rectification, R & D, and so on, contributing to the continuous growth of the company's revenue. Since 2018, the inventory turnover has been 80 days, up 5 days from the same period last year, mainly due to a slight increase in the company's promotion of new product lines.

Zhang Yidong, vice president of Societe Generale Securities economics and Finance Research Institute, said that since 2018, XTEP's retail inventory cycle has steadily declined to 4 months, less than 4-6 months of industry average, and terminal inventory to maintain a healthy level. In the 2015-2018 year, in order to push ahead with the reform smoothly, the company extended the account period for the general agent, and the turnover days of the company's accounts receivable increased accordingly. With the completion of the channel reform, the turnover days of the 2018 companies' accounts receivable fell to 111 days, which is comparable to that of other industries. At the same time, by the impact of one-time repurchase stock and the provision of bad debt provision during the reform period, the company's ROE declined in 2017. In 2018, XTEP's international receivable trade receivables returned from negative to positive, and ROE rebounded to 12.45%, slightly higher than that of Lining. In addition, the company has sufficient cash flow, has maintained more than 50% of the dividend payout ratio, 2018 dividend yield of up to 60%.

Zhang Yidong introduced that in the past, XTEP sold the product wholesale to exclusive distributors, exclusive distributors as the two level wholesalers, and then sold the products to all levels of the channels below, eventually reaching the retail outlets. Under the mode, the company was difficult to carry out cargo tracking and inventory management, and the terminal operation efficiency was relatively low. After the reform, XTEP Group signed a contract with 40 exclusive agents. The sole agent was transferred from wholesalers to retailers, and directly operated about 60% of XTEP stores. The remaining 40% of XTEP stores located in 3 and 4 cities were the franchisees of the general agency. Under the new mode, XTEP was able to control the retail channel in a comprehensive way, and from the distributor manager to the retail network manager.

With the flat channel reform, XTEP international operation efficiency has improved significantly. Since 2018, the retail stock cycle of XTEP has steadily declined to 4 months, below the average of 4-6 months. In the 2015-2018 year, in order to push ahead with the reform smoothly, the company extended the account period for the general agent, and the turnover days of the company's accounts receivable increased accordingly. With the completion of the channel reform, the turnover days of the 2018 companies' accounts receivable fell to 111 days, which is comparable to that of other industries.

Reporters learned that as of the second half of 2018, XTEP's number of stores in China and overseas increased by about 200, but by the 4 quarter of 2018, XTEP international channel inventory has been maintained for 4 consecutive months in fifth consecutive quarters. Meanwhile, the same store sales have also achieved double-digit year-on-year growth in the 3 quarters. The growth of terminal store sales has made it possible for agents to open new stores. According to the disclosure of special international management, the growth target of the company in 2019 was 200-300, representing an increase of about 4% over the end of 18.

Zhang Yidong analyzed that at present, XTEP international mainly produces three categories of shoes, clothing, decorative products. In 2018, three products accounted for 61.5%, 36.4% and 2.1% respectively. In addition, the company focuses on two major functional sports products and life products. Among them, functional sports products run at the core, and footwear products are divided into three categories: racing, fast running and easy running. Clothing products are divided into six major categories: cool dry and ice releasing. They constantly raise high-tech content in their functions. The lifestyle products are mainly based on international sports and leisure, and various products for the younger generation are continuously introduced through celebrity endorsement and third party intellectual property cooperation. From the point of view of the channel, most of the company's revenue in 2018 still came from offline channels, with a net income of about 5 billion 100 million yuan, accounting for about 80%, and online income of about 1 billion 300 million yuan, accounting for about 20%.

What's more, we need to see that the XTEP international new design team is made up of design talents from all over the world, integrating the professional design and technology knowledge of the global sporting goods brand, providing consumers with innovative sports products with functional and comfortable features. XTEP's latest product has changed its old image, and its design can match the leading brands of Anta and Nike at home and abroad. In addition, XTEP also launched a number of joint products, such as Smiley joint venture, bumblebee joint fund and so on, attracting young consumers through new fashion products design.

Up to now, XTEP international has established a professional team of about 1000 big data experts, not only responsible for supervising the business activities of various stores, but also analyzing the collected data to assist in formulating product ordering guidelines, store display and future product direction. In terms of monitoring, XTEP can view the sales progress, inventory level, discount rate and sales efficiency of each store in real time. The analysis of the big data helps XTEP to set the exact discount range for the shops, guide the shop assistants to change the display of the shop products, understand how to improve the customer service quality, formulate the precise product ordering guidelines for the exclusive distributors, and observe the consumer behavior to make the future products more popular.

Zhang Yidong, vice president of the Institute of economics and finance of Xingye securities, said that in the next three years, XTEP's main brand clothing and footwear will continue to contribute to the company's revenue. The new brand of joint venture and acquisition in 2019 will gradually start and will continue to exert strength in the future. Expected 2019-2021 years, XTEP international footwear and clothing growth will remain at around 20%, and because shoes and clothing is the main category of the company, the annual contribution to the proportion of larger revenue. On the whole, XTEP international business revenue will show a steady upward trend in the next three years.

Public information shows that the XTEP brand was founded in 2002 and listed on the Hong Kong Stock Exchange in 2008. The company is mainly engaged in the design, development, manufacture, marketing, marketing and brand management of sporting goods such as footwear, clothing and accessories. According to the results of the report, as of 2018, there were more than 6200 retail outlets operated by XTEP international exclusive distributor, covering 31 provinces and overseas regions.