XTEP International Lowered Its Profit Forecast By A One-Time Cost Of Acquisition.

A few days ago, XTEP international issued a profit warning, announces that the main brand XTEP maintained a growth rate of more than 20% in 2019, and the overall revenue increased by about 32%. At the same time, XTEP International said that considering the slowdown in the overall apparel retail industry and the intensified competition in the mass market, the overall revenue of the main brand XTEP in 2020 will slow down to double digits. The overall revenue growth is about 22.6% (considering the new brand and table).

In August 1, 2019, XTEP international completed the acquisition of the brand "K-Swiss", "Palladium" and "Supra", with a transaction value of about 1 hundred million. XTEP said that the new brand will not generate significant profits in a short period of time. It is estimated that the joint venture's impact on the company in 2019 will be about 20 million of losses (mainly from the initial investment of the new brand).

Therefore, XTEP lowered its profit target in 2019, 2020 and 2021 to 680 million, 860 million and 1 billion 260 million yuan, the growth rate was 4.2%, 25.8% and 46.4% respectively.

In addition, the newly acquired K-SWISS and Palladium two brand profit and loss statements will be directly processed and processed. It is estimated that in the 2019 and 2020, the operating profit of Palladium brand can basically offset the initial investment cost of the K-SWISS brand, and the 2019 brands in 2020 and the two brands in the whole have less impact on the company's profits.

In the first half of 2019, the sales revenue of the company increased by 23% to 3 billion 360 million yuan (the same below). The three quarter was negatively affected by the weather factors, while the retail sales growth slowed slightly to about 20%. However, since October, the sales growth momentum has resumed the first half year growth rate, and the main brand XTEP's annual revenue growth is estimated to exceed 20%.