Xtep (1368) H2 2024 earnings summary

Executive summary

• Revenue grew 6.5% year-over-year to RMB 13,577 million, with net profit attributable to equity holders up 20.2% to RMB 1,238 million and operating profit rising 9.3% to RMB 1,966 million.

• Maintained market leadership in China's running segment, with Xtep achieving the highest wear rates at major marathons and Saucony ranking top 3 globally.

• Professional sports segment revenue surged 57.2% to RMB 1,250 million, with Saucony revenue exceeding RMB 1 billion and Merrell focusing on e-commerce and outdoor products.

• Strategic management changes and succession planning announced to support multi-brand and global expansion.

• Divestment of K-SWISS and Palladium streamlined the brand portfolio and improved working capital.

Financial highlights

• Gross profit margin improved to 43.2% (up 1.4 percentage points year-over-year), with operating profit margin at 14.5%.

• Net profit margin increased to 9.1% (up 1 percentage point), and basic EPS rose to RMB 48.7 cents.

• Net cash and cash equivalents grew 5.6% to RMB 985 million; current ratio at 2.1x.

• Inventory turnover days improved to 68 (down 22 days), while receivables turnover days increased to 120.

• Full year dividend payout ratio reached 138.2% (including special dividend), with total dividends up 221.7%.

Outlook and guidance

• Strategy for 2025 focuses on running, professionalism, and refined operations to drive high-quality growth.

• Plans to strengthen DTC strategy, reclaim 400–500 stores for DTC model, and invest RMB 500 million in capex for 2025–2026.

• Saucony to accelerate flagship and concept store openings, enhance branding, and expand apparel/lifestyle offerings.

• Emphasis on expense control, retail and inventory management, and channel management for effective growth.

• Cautious optimism for 2025 amid economic and geopolitical uncertainties, with stable demand for sportswear anticipated.