Xtep’s interim profit rises as China’s running craze lifts Saucony sales

Xtep International Holdings’ interim earnings surged to a record, as the sportswear maker and distributor of the Saucony brand of running shoes benefited from the new-found popularity of marathons and trail running in China.

Net profit rose to a record 913.6 million yuan (US$127.3 million) in the first half, 6.4 per cent more than the revised interim earnings last year, Xtep said in a statement on Monday. Sales increased 7.1 per cent to 6.84 billion yuan, from the restated revenue of 6.38 billion yuan last year.

While Xtep’s mass-market namesake brand contributed 88.5 per cent of the company’s revenue, its professional segment – Saucony and Merrell – reported the sharpest sales growth, jumping 32.5 per cent to 785.1 million yuan. Interim operating profit from the two brands more than tripled to 78.6 million yuan, vindicating the 2023 move by the Xiamen-based company to take full control of the brands’ distribution in China.

Xtep’s “professional-to-mass” influence has been successful in several of China’s major marathon races, giving the company the drive to “maximise the synergies” between the mass-market and high-end brands, chairman and CEO Ding Shuipo said during a post-earnings press conference.

Ding Shuipo, Chairman and CEO of Xtep International Holdings Limited, during a press conference on May 6, 2019, in Hong Kong. Photo: Nora Tam

“I believe Xtep has a lot of resources and fundamental advantages in this area, whether it’s in terms of speed, positioning or functionality,” Ding said.

The strong growth shows how some companies that combine mass-market products and niche brands are beginning to crawl their way out of China’s years-long consumption slump, even as overall economic growth remained tepid. Last week, China’s largest games publisher and social media network Tencent Holdings reported a 16 per cent jump in second-quarter profit.

South China Morning Post