On July 13, the domestic sports brand Xtep International (hereinafter referred to as “Xtep”, 1368.HK) issued a profit forecast after the market closed. As of June 30 Unaudited consolidated profit for the six months to date increased by more than 65% year-on-year. In the same period last year, the company’s net profit was 248 million yuan. In other words, Xtep International made at least 409 million yuan in the first half of this year, exceeding the KPI.
Xtep attributed the rapid growth of performance to the surge in replenishment orders of Xtep’s main brand agents due to strong retail performance; the accelerated growth of the main brand’s e-commerce business; and Xtep Children’s Sales momentum is strong after successful reorganization in product design and quality, brand positioning and retail network management.
In recent years, influenced by the “national trend”, domestic sports brands have quickly “out of the circle” and attracted a large number of young consumers. After the “Xinjiang Cotton” incident, local companies have attracted even more attention. As Xtep’s performance continues to grow, its stock price has also reached a new high. It has increased by nearly 300% this year. Hillhouse’s entry has added more imagination to Xtep.
In the past six months, Xtep has conducted business operations professionally and achieved performance growth. This is also the prelude to Xtep’s brand reshaping. In the future, Xtep will ” revaluation”.
Online business growth, children’s sector is gaining momentum
Since last year At the beginning, clothing brands paid more and more attention to online channels, and the e-commerce business of domestic sports brands achieved rapid growth. Xtep’s performance growth in the first half of the year is also inseparable from the rapid development of e-commerce business, and the proportion of online operations continues to increase.
“As the group intensifies promotion efforts on multiple online platforms, social media and live broadcast channels to drive sales, the e-commerce business of Xtep’s main brand has accelerated growth.” stated in the announcement.
At the same time, Xtep’s children’s section is also gaining momentum. Information shows that Xtep Children was founded in 2012. It has always adhered to the concept of combining brand development with traditional culture, and tried its best to promote national confidence and the style of Shaolin, a great country. Thanks to improvements in brand awareness, product design and quality, as well as better retail management since the successful reorganization from 2015 to 2017, sales of the children’s business doubled during that year’s Double Eleven shopping festival, showing strong performance.
Xtep’s 2020 annual report shows that as of the end of 2020, Xtep Children has 800 sales points, and retail sales have remained stable despite the impact of the epidemic. Recently, Xtep has launched a new positioning for the children’s segment as “Xtep Children, Young People in a Powerful Country”.
At present, in the children’s series, the Shaolin children’s series, which is in line with tradition, and the hip-hop series, which actively touches on popular trends, have become the two main style lines. Among them, the Shaolin Children’s Series has launched three co-branded series of Power, Li and Wisdom, showing the power, etiquette and wisdom of youth.
The style line of street dance originated from the strategic cooperation between Xtep Children and the CHUC Youth Street Dance National Team in 2019 and the establishment of the BDS street dance competition to discover and reserve more excellent talents for the Olympics. Young talent.
In the 2020 annual report, Xtep stated that it will continue to expand its children’s business with a cautious attitude in the future. Against the background of the rapid development of the children’s clothing industry and the policy dividends of the “three-child policy”, Xtep Children’s will become more powerful based on its existing achievements.
Win the sporting goods track with “professionalism”
Retail The sales are growing rapidly, and the wear rate in sports events exceeds that of international brands. Xtep’s main brand is outperforming the sporting goods track with its “professionalism”.
In the first half of this year, Xtep’s main brand retail sales (including online and offline channels) grew by 40%-45% year-on-year. In April this year, at the Xiamen Marathon, Xtep’s 160X series of running shoes surpassed Nike for the first time with a wear rate of 51.03%, becoming the first choice for elite runners within 3 hours; at the Olympic trials the next day, the Xuzhou Marathon, the top 9 runners Among the male athletes, 7 are wearing 160X series running shoes. “Running expert” became the capital market’s repositioning of Xtep at that time.
The highlight moments of the two marathon events are the result of Xtep’s years of deep involvement in the running field. Since 2007, Xtep has sponsored major marathon events and has sponsored more than 1,000 events in total. It is also the domestic brand that sponsors the most events.
In 2012, Xtep established the “Tep Running Club”, using the “Xtep Running Club” as its base to provide running posture correction, physical fitness testing, running training, etc. Free trial service. As of now, the number of “Tepao” people has exceeded 1 million. Even in 2020, when the epidemic caused the suspension of marathons, the “Chinese Racing” strategy jointly launched by Xtep and the Chinese Athletics Association still issued rewards worth 1.63 million yuan, allowing domestic marathon athletes to get rid of the reward “desert” that had been in place for a long time in the past.
In terms of technology investment in running shoes, Xtep’s R&D expenses have increased year by year since 2008. X-lab, a scientific laboratory established in 2018, is specially tailored for runners and has established long-term cooperative relationships with more than 3,000 runners across the country. It ensures the cutting-edge nature of running shoe technology by ensuring the comprehensiveness of runners’ data information.
After the success of the 160X series, Xtep took advantage of the momentum and rapidly expanded the category of racing running shoes, enriching the product matrix and price.Meanwhile, the 300X2.0, which has just been launched this month, and the 160X2.0PRO, which will be launched in August, are also Internet celebrity models that consumers have long awaited. It is reported that in the second half of the year, the takedown version brought about by technology decentralization will also be launched.
According to the “2018 China Marathon Annual Main Report”, the number of participants in the marathon reached 5.83 million. The market estimates that the number of mass runners who love running is expected to reach 300 million. The “running expert” may have already been ready to hit the track.
Is the valuation inflection point approaching?
The brand image of running experts has formed misaligned competition, and multi-brand operations have achieved performance growth. Xtep’s valuation turning point may have arrived.
Data shows that since this year, Xtep’s share price has increased by nearly 300%. On June 15, Hillhouse invested HK$1 billion in Xtep, joining the domestic sporting goods brand track and adding another boost to Xtep’s stock price. In July, the stock price hit a record high of HK$16.32.
In addition, with the rise of national fashion, the value of domestic sports brands has been recognized by the capital market. Xtep has also launched a youth layout to empower the brand with “national fashion”. After launching the joint cooperation with Shaolin IP in 2020, Xtep’s “trendy” label has become increasingly strengthened. On May 15 this year, the Xtep Shaolin new product series released on Xtep’s Tmall Super Product Day had a turnover of more than 60 million in the official flagship store within three days, ranking first in the sales volume of the sports shoes and apparel industry during the same period. At the same time, the membership growth of Xtep’s official flagship store soared by 2.38 times, and the assets of Generation Z increased by 1.05 times.
Not only in Shaolin, in July, Xtep Po Dimension cooperated with Ling Yuan, one of the most popular virtual idols at Station B, to jointly launch the PV “Youth Never Stops”, opening up the national trend sports A new channel for selling clothing. According to data from Station B, Lingyuan has 2.89 million fans and has won the honorary title of Top 100 UP Hosts at Station B for three consecutive years.
It is worth noting that the space for domestic sports brands does not stop there. After the “Xinjiang Cotton” incident, domestic brands, especially domestic sporting goods brands, emerged like a dark horse. The investment circle, mainly those aged 30+, has also realized that Generation Z, the main consumer of clothing, no longer pursues imported products like the previous generation, but has a heartfelt sense of pride in domestic products.
Industry insiders believe that the domestic sporting goods track has unlimited room for imagination in the future, and giants like Nike and Adidas may even be born. The key to who can stand out in this track is whether it has sufficiently professional products and the ability to innovate to meet consumer iteration needs. Xtep has been deeply involved in the domestic sporting goods industry for many years, and there is still more room for imagination and development in the future. </p
