Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
XTEP INT'L
HKEx Stock Code : 01368 
 
Corporate Profile
Principally engaged in the design, development, manufacture and marketing of sportswear, including footwear, apparel and accessory products, sold mainly under the selfowned Xtep brand and other licensed brands.

Business Review - For the year ended December 31, 2012

Brand Management

Amidst fierce competition in the domestic sportswear sector, strong brand equity has become more essential in order for players to stand out in the market and propel sustainable development. Over the past decade, resulting from its successful and consistent branding strategy, Xtep has established a unique brand position with a trendy and fashionable image. During the year, the Group continued to adopt its dual sports and entertainment marketing strategy to promote brand awareness and to reinforce Xtep's position as the leading fashion sports brand in the PRC.

X-Ceptional Decade Celebration

To commemorate Xtep's 10th anniversary, a grand X-Ceptional Decade celebration event was held in Xiamen on 10 April 2012. With the theme of "Rising Power", the Group was honored to have key local government officials join the event to celebrate this milestone anniversary. Honorable guests including Mr. Zhong Xingguo (Á鿳°ê), Deputy Secretary of Xiamen Municipal Committee of the Communist Party of China (CPC), Mr. Fu Chaoyang (¥I´Â¶§), Deputy Mayor of Quanzhou Municipal People's Government and Mr. Gerhard Heiberg, Chairman of the International Olympic Committee (Marketing Commission), attended the event together with about 6,000 other valuable guests. Representatives of Xtep's exclusive distributors and franchisees, together with its celebrity spokespersons, namely, Nicholas Tse (Á¾^¾W), Han Geng (Áú©°), Jolin Tsai (½²¨ÌªL), Wilber Pan (¼ïÞ³¬f), and the newly appointed brand representatives, Gwei Lun-mei(®ÛºúÁâ) and Justin Gatlin, also joined this commemorative event.

Business Outlook - For the year ended December 31, 2012

The outlook for the global economy in 2013 and the recovery of China's economic growth remain uncertain. In regards to the sportswear sector, existing issues such as intense competition, excessive inventory and high retail discounts will continue to linger during the coming year. In addition, high labor costs and lukewarm new sales orders will add to the pressure in the sector.

However, the Group is of the view that in the long term, with support from national policies, the sector as a whole will gradually recover and resume healthy growth. The PRC Government's favorable policy on urbanization development will create new potential in the third and fourth-tier city markets. Moreover, the national campaign "Fitness for All", which encourages more people to participate in sports and to live a healthier lifestyle will also boost the demand for sportswear products. The Group will continue to execute its comprehensive strategies to uphold its position as the leading fashion sportswear brand.

Integrated Brand Management

Leveraging its distinctive identity as a trendy and fashionable sportswear brand, the Group will continue to reinforce its brand image through the implementation of integrated marketing and promotional strategies. At the beginning of a new decade for Xtep, the Group is honored to be named the sole apparel sponsor of the 2013 National Games for the third consecutive time, and the official sponsor of twelve delegation teams of the National Games, including Liaoning, Beijing, Jiangsu, Tianjin, Guangdong, Zhejiang, Hunan, Henan, Hebei, Guizhou, Hubei and, last but not least, the People's Liberation Army delegation. This prominent sponsorship will put the Xtep brand in the national spotlight, as the National Games is the most important sporting event attended by all of the PRC's top athletes, with millions of people expected to watch.

Apart from this prominent event, Xtep will also continue to sponsor major international marathons and running events in hopes of achieving Xtep's ultimate goal of being the "Runner's Choice". Some significant continuing sponsorships by the Group, include the Xiamen International Marathon, Standard Chartered Hong Kong Marathon and China Zheng-Kai International Marathon, which highlight its commitment to strengthen its leading position in the running segment.

Diversified Product Portfolio and Innovative Products

To uphold its leading fashion sports marketing position and to build stronger brand equity for Xtep, the Group will strive to enhance its product portfolio. In doing so will keep the Group fully attuned to the changing market trends and consumption pattern. Therefore, to fully capture emerging market opportunities, the Group will ITS "X-TOP" and "Xtep kids" series, as well as enhance its e-commerce distribution channels.

The Group places great emphasis on product innovation that satisfies changing consumer needs and differentiates the Xtep brand from others. Leveraging on the success of its running series, the Group will continue to invest in R&D to improve the design and functionality of its sportswear products. The Group believes that its innovative products will help to strengthen its unique reputation as a trendy and fashionable brand and cultivate greater brand loyalty.

Retail Channel Management

Retail channel management will be a top priority for the Group to optimize its overall operational efficiency and to maintain a sustainable business environment. In 2013, the Group intends to further consolidate 100 to 200 retail outlets in areas in which the locations are remote and the operations have underperformed. While further network consolidation in less efficient areas shall continue, the Group will expand its coverage in the core market of third and fourth-tier cities in which urbanization policy has brought high growth potential. Moreover, the Group has made the northern cities a major focus of its development plans in order to capture opportunities in this region and to complement the Group's prominent marketing cam paign as the sole apparel sponsor of the 2013 National Games to be held in Liaoning.

To enhance retail store efficiency, the Group will continue to encourage its distributors and franchisees to take a conservative approach to placing future orders. At the same time, the Group will implement measures to alleviate the pressure of distributors by offering a higher wholesale discount and by providing additional incentives in store renovation and interior design to heighten Xtep's store image. These measures should maintain its overall competitiveness within the industry.

Source: Xtep Int'l (01368) Annual Results Announcement
Chairman Ding Shui Po Issued Capital (shares) 2,177M
Par Value HKD 0.01 Market Capitalisation (HKD) 8,445M
 
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