XTEP $260 Million Acquisition Of US Sports Brand 2018 XTEP Business Analysis (Chart)

In May 2nd, XTEP International announced that its Hongkong wholly owned Affiliated Companies, XtepGlobalLimited, formally signed a share purchase agreement with the Korean fashion retail group E-Land, E-LandWorldCompany, Ltd and E-LandUSAHoldingsInc. (collectively known as "love and love group"), and intends to purchase all the shares issued by us E-LandFootwearUSAHoldingsInc. with a cash of 260 million US dollars (about 1 billion 749 million yuan).

The announcement indicates that the acquisition will be funded by internal funds. The two sides agreed that the transaction should be completed by July 2019 or before, but the transaction still needs the approval of the US antitrust agencies. In addition, the prerequisites for the transaction include the buyer's establishment of a joint venture with Shanghai garment company and the exclusive distribution license of paladin brand in China. XTEP's acquisition of the brand is also aimed at expanding internationalization.

XTEP international annual revenue of 6 billion 383 million yuan in 2018

The report shows that XTEP International's annual revenue in 2018 was 6 billion 383 million yuan, an increase of 25% over the same period last year, a record high since the listing. Net profit for the whole year was 657 million yuan, an increase of 61% over the same period, while the gross profit of the whole year increased by 26% to 2 billion 828 million yuan.

Data sources: corporate earnings, China Business Research Institute

In 2018, XTEP footwear revenue was 3 billion 925 million yuan, accounting for 61.5% of total revenue and 1 billion 790 million yuan gross profit. Read past earnings report, this is since 2014, for five consecutive years, footwear revenue accounted for over 60% of total revenue. Among the four major domestic sports brands, the proportion of footwear products in XTEP's sales is the highest, while the other three similar brands, Anta, Lining and 31st degree shoes, account for less than 50% of their footwear revenue.

Data sources: corporate earnings, China Business Research Institute

As of the end of December 2018, there were 6230 XTEP stores. Among them, the number of sales outlets in XTEP children's department is about 450, although sales in the period increased by more than 50%, but children's clothing business still has a very small income.

On the overseas market, XTEP said that it will open up Asian markets in 2018, including shops in Vietnam and India, and will continue to expand in 2019 and plan to seek market opportunities in the Middle East and Central Asia.

Data sources: corporate earnings, China Business Research Institute

XTEP said that the growth of revenue was mainly attributable to two aspects: first, the upgrading of shops and the optimization of retail networks, so that the sales performance of retail outlets was strong, and the supply and recognition of products increased, resulting in a higher sales rate and the replenishment orders of agents. Two, XTEP group carried out inventory repurchase in 2017 to increase the demand for replenishment stocks.

For more information, please refer to the "2019-2024 China sports apparel market prospects and investment opportunities Research Report" issued by the China Industrial and Commercial Research Institute. At the same time, the China Industrial and commercial research institute also provides industrial big data, industrial planning and planning, industrial park planning and planning, industrial investment promotion and other solutions.