Return To Professional Sports XTEP Layout Multi Brand Strategy

Beijing time January 22nd, XTEP International Holdings Limited released its financial year briefing. It is expected that the total net profit of XTEP common stock holders will increase by about 50% to 60% by the end of 2017 as of the end of December 31, 2018.

In this regard, XTEP pointed out in the announcement that the expected growth of XTEP's overall net profit is mainly due to a substantial increase of about 25% of the total revenue. This is attributed to two aspects: on the one hand, the upgrading of XTEP stores and the optimization of retail network result in strong retail sales performance, product supply and recognition, resulting in a higher sales rate and replenishment orders for agents. On the other hand, the group's demand for replenishment inventory increased due to the inventory repurchase in 2017.

Sponsoring marathon race in main professional sports area

According to the interim results released by XTEP, in the first half of 2018, XTEP's same store sales in the first quarter and the two quarter showed low double-digit and double-digit growth respectively.

This is the first time that XTEP has achieved double-digit growth in the first five years since the disclosure of the same store sales growth in the first quarter of 2013. Today, XTEP's growth rate has remained stable.

In order to maintain a professional brand image, XTEP began sponsoring the marathon in 2011, and jointly completed the marathon operation development, brand promotion and industrial chain layout with Chi Mei Group.

In 2017, XTEP sponsored 40 running events, including 29 marathon events, the most Chinese brand sponsoring marathon events.

Zhang Wei, director of sports marketing center of XTEP brand system, believes that an industry and a brand must have its own core competitiveness.

A sporting goods brand must strive to be the first in a specific field.

Foreign brands are well aware of this.

What XTEP wants to do is to let runners think of XTEP when they think of running, and "love running and love XTEP".

At present, XTEP sports professional products, especially running shoes products, account for more than 35% of sales of XTEP shoes.

In the second quarter of 2018, XTEP's "shock-absorbing" running shoes sold more than 1 million pairs.

As early as April 2016, XTEP put forward a football strategy.

Two months later, the football product line was launched. In 2017, XTEP launched the new blade two generation MG soccer shoes as an official sponsor of the international Champions Cup, and then launched intelligent running shoes, such as XTEP core racing shoes.

Despite continued efforts in the professional field, the news that programmers refused to wear XTEP shoes may have made XTEP aware that the brand image needs to be promoted faster.

In order to create a fashionable effect, XTEP spent a lot of money to cooperate with celebrities like Zhao Liying and Tian Jing.

However, it is worth noting that with the promotion of endorsements by celebrity endorsements, the intensity of advertising has also increased year by year. According to Caixin statistics, after 2015, the proportion of XTEP advertising costs has been higher than that of Anta and 331 degrees, but the proportion of R & D expenses has been lower than the previous two companies.

Layout, multi brand strategy and channel upgrading

In 2019, multi brand strategy will be the key development direction of XTEP.

Ding Shuibo said XTEP will develop from single Brand Company to multi brand group.

In order to diversify business risks and broaden the channels of profit, XTEP has made many attempts in diversified businesses, such as starting contact and production of outdoor products, women sports products and children's sporting goods series.

It is worth mentioning that in 2016 and 2017, XTEP carried out a major reorganization of the children's department in order to find a better position to achieve more profitable growth in the future, but the effect is still not obvious, and the income from the children's Department's contribution to XTEP is still very small.

In the process of reform, XTEP also adjusted its channel structure flat, reduced the level of distribution channels to two levels, increased the number of exclusive agents to 40, and the exclusive distributor accounted for 60%.

It is worth mentioning that, thanks to the new retail mode, XTEP helped to guide the exclusive distributor, its profitability continued to increase, and the financial pressure eased. The group gradually cancelled its support for the exclusive agent account, and XTEP receivables fell in 2017.

On the other hand, XTEP has adjusted its ordering method to sell products, and orders will be shipped three times per quarter. The third shipment will be determined flexibly according to the sales ability.

Under the new channel structure, XTEP online e-commerce and offline store stock sharing, XTEP channel inventory cycle has improved.

After three years of reform, XTEP's stock level has also improved, and the stock cycle has been stable for about 120 days.

In addition, in 2018, XTEP's online performance was outstanding.

In the first half of 2018, XTEP's electricity supplier contributed more than 20% of its revenue, and it replaces Tmall's highest running shoes brand.

In 2018, "double 11" period, XTEP's total network sales exceeded 310 million yuan, an increase of 50% over the same period last year, directly into the "double 11" sports outdoor class turnover list top 10.

As the channel performance is better than expected, XTEP has said that since the second half of 2018, the profitability of orders and distributors has improved, and the company's revenue growth is expected to increase.

An analyst who does not want to be named in Zhongtai Securities believes that today, consumers are showing rational regression in shopping choices. XTEP is favored by many consumers because of its high cost performance advantage.

The analysts said XTEP's pformation strategy forced its products to change, which also promoted XTEP's brand image.

Although XTEP performed well in 2018, XTEP has to continue to increase its R & D investment in the professional field, thanks to the attack of sports brands at home and abroad.

"At present, many sports brands have laboratories, and foreign sports brands are much more invested and valued in this respect than domestic brands, so XTEP can cooperate with research institutes to improve their research and development capabilities."

He said.

Author: Jie Yu Xing