Monday 8 March 2010
Leading sports brand posts sound growth
Sports goods retailer 361 Degrees International reported sound growth in the six months that ended on December 31, proving that the brand is strong enough to maintain its position as one of the leading sports enterprises on the mainland despite the financial downturn.
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Leading sports brand posts sound growth
Ana Wang
01 March 2010
Sports goods retailer 361 Degrees International reported sound growth in the six months that ended on December 31, proving that the brand is strong enough to maintain its position as one of the leading sports enterprises on the mainland despite the financial downturn.
Listed on the main board of the Hong Kong stock exchange on June 30 last year, the group recorded a 177 per cent increase in profit attributable to shareholders at 356.75 million yuan (HK$405.78 million) for the interim period compared with 128.81 million yuan a year earlier.
Basic earnings per share increased by 101.2 per cent from 8.6 fen to 17.3 fen for the period.
The board recommended a payment of an interim dividend of 4.9 HK cents per share, which will be payable on April 16.
Resulting from a rapid expansion of the group’s retail network and an introduction of a broader product mix, turnover for the period surged by 29.9 per cent from 1.35 billion yuan a year earlier to 1.76 billion yuan.
The gross profit margin for 361 Degrees products during the period rose by 10.3 percentage points from 29.3 per cent in the period last year, as a result of the introduction of high-end and higher-priced products manufactured in-house that led to wider margins and lower materials costs.
The revenue increase primarily came from an improvement in sales volume, with footwear adding a further 44 per cent and apparel higher by 15 per cent compared with the same period a year earlier.
The average wholesale price has increased slightly and the group believes the prices will be maintained since the group recorded a 23 per cent growth in year-on-year sales orders during a trade fair for the autumn 2010 season.
Looking ahead, the group’s management says the mainland’s economic growth, urbanisation and the central government’s persistent efforts in the nationwide fitness campaign, spearheaded by the State General Administration of Sport, the effects of the Beijing Olympics and the upcoming Asian Games in Guangzhou this year, will contribute to increasing awareness of sports, healthy lifestyles and fitness. This in turn will help drive demand for sportswear. The group’s management team includes Ding Wuhao, Ding Huihuang, Ding Huirong and Wang Jiabi.
361 Degrees International has more than 6,690 sales outlets on the mainland in core markets, including Shenyang, Beijing, Shijiazhuang, Jinan, Nanjing, Shanghai, Wuhan, Zhengzhou, Guangzhou, Kunming and Chengdu.
The group distributes its products through a network comprising 30 independent exclusive distributors that oversee 3,490 authorised dealers. About 30 per cent of the franchised outlets are in tier-one and tier-two cities, with the rest located in more than 550 smaller cities that have a more rapid pace of development.
The company opened its first new-generation flagship store in Zhengzhou this January, which features the latest product offerings from 361 Degrees and aims to communicate the brand’s mission of establishing itself as a major brand in the sportswear industry on the mainland more efficiently.
The group recorded a growth in its footwear segment that comprises about 59 per cent of the total revenue, as the status of the brand continues to grow through the solid improvement in the product offering and quality.
The group will also gain recognition from being a Prestige Partner of the 16th Asian Games this year and through the marketing campaigns that will be carried out in the coming months.
“We will continue to expand in the lower-tier cities as and when opportunities arise, while we will also plough in more resources to open ‘361 Town’ flagship stores in bigger cities in an effort to strengthen the equity in the brand,” says Ding Wuhao, the company’s president and executive director.
“Chongqing, Shandong, Sichuan, Henan and Zhejiang will be the key markets. We will strive to maintain our leading position and excel in distribution, product design and innovation.”
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