XTEP INT'L (01368): Postponing the five-year plan, the target sales growth for this year is not less than 10%

On March 18, XTEP INT'L (01368) released its 2023 financial performance and held a performance briefing. The group's Chief Financial Officer, Yang Lubin, pointed out that the group's dividend payout ratio for the year is about 50%, and they hope to continue maintaining a good dividend record. The group's target for 2024 is a sales growth of no less than 10%, with profits growing faster than sales. He also mentioned that the five-year plan previously raised by the group will be put on hold due to the current economic environment. In terms of performance, XTEP INT'L achieved a revenue of 14.346 billion yuan in 2023, an increase of 10.94% year-on-year; operating profit of 1.58 billion yuan, an increase of 7.89% year-on-year; net profit attributable to ordinary shareholders of 1.03 billion yuan, an increase of 11.75% year-on-year; basic earnings per share of 40.76 cents; proposed final dividend of 8 Hong Kong cents per share. During the period, revenue from the main Xtep brand increased by 7.4% to 11.947 billion yuan; gross profit margin increased by 1.3 percentage points to 42.2%. The overall increase in gross profit margin is mainly due to the increase in revenue and gross profit of high-margin functional products, as well as a significant improvement in the gross profit margin of fashion sports. In 2019, XTEP INT'L's wholly-owned subsidiary Xtep Global Limited completed the acquisition of the "K-Swiss" brand. Yang Lubin pointed out that K.SWISS has opened a new concept store in Hong Kong, while the opening of flagship stores in Hong Kong will be delayed, taking into consideration factors such as rent and economic conditions, with the next goal being to expand the business of Saucony in Hong Kong. He also mentioned that due to the different current economic environment, the five-year plan previously raised by the group will be put on hold, and the group's operational growth is already difficult to achieve. The most important thing is to maintain healthy inventory and profitability. The Chairman and CEO of the group, Ding Shuibo, pointed out that the economic situation in 2023 is poor, but sports goods consumption is still relatively good. They hope to continue to maintain a good performance in 2024, with several brands under them continuing to launch new businesses in Hong Kong. The President of the group, Tian Zhong, noted that in December 2023, the group announced the acquisition of the equity held by the joint venture company of Wolverine Group in 2019, to sell and distribute Saucony and Merrell brand products, and to acquire 40% of the intellectual property rights of Saucony in China. This transaction demonstrates Xtep's confidence and determination in the business development of Saucony and Merrell brands and their growth potential in the Chinese market. Saucony continues to expand its retail business in first-tier cities and opens retail stores in high-end shopping centers in second-tier cities.