Xtep International Holdings Limited (Incorporated in the Cayman Islands with Limited Liability) Stock Code: 1368.HK 2023 Interim Results Presentation 23 August 2023 2023 Interim Results Highlights Core Xtep branded stores in Mainland China and overseas as at 30 June 2023 8,031 RMB 665 m 12.7% RMB 5,430 m 10.9% Core Xtep brand'srevenue Core Xtep brand's net profit RMB 871 m 12.7% RMB 6,522 m 14.8% Group's revenue Profit attributable to ordinary equity holders of the Company HK 13.7 cents Payout ratio: 50.0% ...

2023 Annual Results Presentation 18 March 2024 2023 Annual ResultsHighlights RMB 14,346 m 10.9% Group's revenue RMB 1,030 m 11.8% globally as at 31 December 2023 8,583 branded stores Core Xtep brand's revenue Profit attributable to ordinary equity holders of the Company Professional sports segment's revenue Athleisure segment's revenue (Mainland China) RMB 11,947 m RMB 796 m RMB 465 m HK 8.0 cents1 Full year payout ratio: 50.0% Final dividend per Share RMB 1,794 m 21.6% Group's inventories RMB 1,255 m 119.5 ...

Financial Performance - The group's revenue reached RMB 7,203 million, a 10.4% increase year-over-year[2] - Gross profit margin improved to 46.0%, up by 3.1 percentage points[3] - Profit attributable to ordinary equity holders of the company increased by 13.0% to RMB 752 million[4] - Interim dividend per share is HK15.6 cents, with a payout ratio of 50.0%[7] Brand Performance - Core Xtep brand revenue grew by 6.6% to RMB 5,789 million[9] - Professional sports segment revenue increased significantly by 72.2% to RMB 593 million[9] - Athleisure segment revenue increased by 9.7% to RMB 821 million[9] Balance Sheet Highlights - Net cash and cash equivalents increased by 51.7% to RMB 1,414 million[13] - Bank borrowings decreased by 22.6% to RMB 2,047 million[13] Sustainability - MSCI ESG rating upgraded to "A"[8] - Charity donations reached RMB 28.8 million[60]

Xtep International Holdings Limited (Incorporated in the Cayman Islands with Limited Liability) Stock Code: 1368.HK 2024 Annual Results Presentation 18 March 2025 2024 Annual Results Highlights Group's revenue RMB 13,577 m 6.5% RMB 1,250 m 57.2% Operating profit RMB 1,966 m 9.3% RMB 1,238 m Profit attributable to ordinary equity holders of the Company 20.2% Final dividend per Share 1 The proposed final dividend per Share will be subject to the approval of shareholders at the forthcoming annual general meeti ...

Summary of Conference Call Company and Industry - The conference call involved **Xtep International**, a company in the **sportswear industry** focusing on running products and brand development. Key Points and Arguments 1. **Sales Performance**: The sales trend is in line with expectations, with healthy levels of discounts and inventory management [2][3] 2. **Brand Strengthening**: The company has been actively promoting new brands, particularly Saucony, through enhanced product offerings and channel strategies [2][4] 3. **Product Mix**: The goal is to increase the apparel segment to approximately 20% of total sales, with aspirations to reach 30% in the future [3] 4. **Store Expansion**: New store concepts, such as the "Moon Concept Store," have been launched to enhance brand image and attract customers [3] 5. **Saucony's Growth Targets**: Saucony aims to double its revenue and operational efficiency over the next three years, with projected revenue growth from 1 billion to over 2 billion [4] 6. **Direct-to-Consumer (DTC) Strategy**: The company is initiating a DTC strategy, planning to reclaim 100 to 400 stores over the next two years, which will involve significant costs [12][13] 7. **Cash Management**: The company has been reducing cash reserves, primarily due to high interest rates in Hong Kong, and is focusing on improving operational efficiency through DTC [11][12] 8. **Running Product Matrix**: The running shoe segment has seen over 25% growth, with a significant portion being functional running shoes [6][7] 9. **Market Positioning**: Xtep has established a strong presence in marathons, with the highest wearing rate among participants, surpassing both international and domestic brands [8][9] 10. **Future Plans**: The company is cautious about expanding into new areas like outdoor sports, focusing instead on consolidating its position in marathons [25][26] 11. **International Expansion**: There are plans to explore markets in Southeast Asia, the Middle East, and Russia, emphasizing the importance of cost-effectiveness in pricing strategies [30][31] Other Important but Overlooked Content 1. **Brand Image and Consumer Perception**: The company is leveraging partnerships with business schools to enhance brand perception among elite consumers [5] 2. **Operational Challenges**: The transition to DTC may lead to short-term revenue impacts, but long-term benefits are anticipated [14][15] 3. **Franchise and Dealer Relationships**: The company is managing a complex relationship with its dealers, with some looking to retire, prompting the DTC shift [11][16] 4. **Future Leadership**: Discussions about succession planning and leadership roles within the company were mentioned, indicating a focus on long-term stability [26][27] This summary encapsulates the key insights from the conference call, highlighting the strategic direction and operational focus of Xtep International in the competitive sportswear market.

Financial Performance - Total revenue for the year reached RMB 13,577 million, representing a growth of 6.5%[8] - Operating profit amounted to RMB 1,966 million, an increase of 9.3%[8] - Profit attributable to ordinary equity holders was RMB 1,238 million, reflecting a growth of 20.2%[8] - Revenue for 2024 reached RMB 13,577.2 million, a 6.6% increase from RMB 12,742.9 million in 2023[27] - Gross profit for 2024 was RMB 5,865.4 million, reflecting a gross margin of 43.2%, up from 41.8% in 2023[27] - Operating profit increased to RMB 1,965.5 million, with an operating margin of 14.5%, compared to 14.1% in the previous year[27] - Net profit attributable to equity holders was RMB 1,238.4 million, resulting in basic earnings per share of RMB 48.67, up from RMB 40.76 in 2023[27] - The group reported a loss from discontinued operations of RMB 67.1 million, a significant reduction from RMB 224.3 million in 2023[145] - The net profit attributable to equity holders increased by RMB 208.4 million or 20.2% to RMB 1,238.4 million, with a net profit margin improving to 9.1% from 8.1%[146] Dividends and Payouts - The final dividend per share declared was 9.5 HK cents, with a full-year payout ratio of 138.2%[8][9] - The company declared a final dividend of HKD 0.095 per share, with a total annual dividend payout ratio of 138.2%, significantly up from 50.0% in 2023[32] - Total dividends for 2024 amount to HKD 0.698, a significant increase from HKD 0.217 in 2023, representing a payout ratio of 138.2%[149] - The company maintained a high dividend payout ratio of no less than 50% over the past five years, demonstrating a commitment to shareholder returns[150] Strategic Initiatives - The company completed the strategic sale of K•SWISS and Palladium, focusing resources on the main brand, Saucony, and Merrell[23] - The company plans to leverage government economic stimulus measures to boost market confidence and consumer demand[31] - The company plans to strengthen its direct-to-consumer (DTC) strategy to enhance brand loyalty and operational efficiency, optimizing retail channel structures for better market insights[108] - The company is expanding its market presence with new flagship and concept stores, enhancing customer experience and brand visibility[89] Brand Performance - Retail sales for the main brand and Saucony recorded high single-digit and over 60% growth, respectively, indicating strong market performance[31] - Saucony, a brand under the group, achieved over RMB 1 billion in revenue for the first time in 2024, marking a significant milestone[37] - The professional sports division, Saucony, achieved revenue of RMB 1,250.3 million in 2024, a year-on-year increase of 57.2%[88] - Saucony's operating profit increased significantly to RMB 78.2 million in 2024, compared to RMB 8.4 million in 2023[88] Market Trends and Opportunities - The outdoor sports market in China presents growth opportunities for the brand Maile, which is actively expanding its e-commerce business[38] - The number of marathons held in China reached 671 in 2024, with participation exceeding 6.56 million, indicating a strong running trend[41] - E-commerce in China saw a significant recovery, with the logistics index reaching 113.7 points, a 3.6-point increase from the previous year[43] - The group anticipates steady growth in sports goods demand, supported by government measures to stimulate consumption[109] Operational Efficiency - The average inventory turnover days improved to 68 days in 2024, down from 90 days in 2023, enhancing operational efficiency[27] - The overall working capital turnover days increased to 87 days in 2024 from 83 days in 2023[151] - Inventory turnover days decreased by 22 days to 68 days in 2024, while trade receivables turnover days increased by 14 days to 120 days[159] Research and Development - Research and development expenses accounted for 2.9% of revenue, slightly down from 3.1% in 2023, reflecting a focus on cost management[27] - The new running shoe technology incorporates PISA supercritical foam for high rebound and cushioning, significantly reducing energy loss compared to traditional materials[77] Community Engagement and CSR - The company donated over RMB 58 million in sports goods and cash in 2024, including RMB 10 million in winter supplies for earthquake relief in Tibet[98] - The company provided over 710,000 hours of training to employees through its talent center, focusing on professional skills, leadership, and cultural operations[106] Investor Relations - The company actively communicated with investors to restore confidence amid macroeconomic uncertainties, enhancing transparency and two-way communication[178] - The company participated in 350 investor meetings throughout the year, including both online and offline events across North America, Europe, and Asia-Pacific[184] Future Outlook - Future outlook remains positive with expectations of stable growth in the sports industry driven by increased health awareness and sports demand[31] - The company plans to continue expanding its market presence and enhancing its retail management capabilities[179]

Revenue and Profit Growth - The group's revenue from continuing operations increased by 6.5% to RMB 13,577.2 million (2023: RMB 12,742.9 million), driven mainly by the stable performance of the Xtep brand and strong growth in the professional sports segment[3]. - Revenue from the Xtep brand rose by 3.2% to RMB 12,326.9 million (2023: RMB 11,947.4 million), while the professional sports segment saw a significant increase of 57.2% to RMB 1,250.3 million (2023: RMB 795.5 million)[3]. - Operating profit from continuing operations grew by 9.3% to RMB 1,965.5 million (2023: RMB 1,798.0 million), with the professional sports segment's operating profit surging by 829.5% to RMB 78.2 million (2023: RMB 8.4 million)[3]. - Profit attributable to ordinary shareholders reached a historic high of RMB 1,238.4 million (2023: RMB 1,030.0 million), marking a growth of 20.2%[3]. - Total revenue for 2024 reached RMB 13,577.2 million, an increase of 6.6% from RMB 12,742.9 million in 2023[38]. - Net profit attributable to ordinary shareholders was RMB 1,238.4 million, representing a net profit margin of 9.1%, up from 8.1% in 2023[38]. - Basic earnings per share for 2024 were RMB 48.67, an increase from RMB 40.76 in 2023[38]. Dividends and Payout Ratios - The proposed final dividend is HKD 0.095 per share (2023: HKD 0.080 per share), with a total annual dividend payout ratio of 138.2%[3][20]. - The annual dividend payout ratio, excluding the special dividend of HKD 0.447 per share, is 50.0%[21]. - The company declared a final dividend of HKD 0.095 per share, with a total annual dividend payout ratio of 50.0%[46]. - The special dividend for the year was HKD 0.447 per share, marking a 221.7% increase in total dividends compared to the previous year[46]. - The company maintained a high dividend payout ratio of 138.2%, with total dividends for 2024 amounting to 69.8 HKD cents per share[165]. - The group maintained a high dividend payout ratio of not less than 50% over the past five years, reflecting its commitment to delivering substantial returns to shareholders[176]. Strategic Focus and Brand Development - The company plans to enhance its direct-to-consumer (DTC) strategy, inspired by successful retail network management, to deepen customer interaction and improve brand loyalty[3]. - The company has strategically refocused on running after the completion of the divestment of K-Swiss and Palladium businesses in November last year[3]. - The company aims to enhance retail channel management and customer experience to expand its market presence in the running segment[49]. - The group aims to strengthen its direct-to-consumer (DTC) strategy, inspired by the success of Saucony in retail network management, to enhance customer interaction and brand loyalty[128]. - The company is focusing on maximizing the synergy between its main brand and the acquired Saucony and Merrell brands in product innovation and marketing[195]. Product Innovation and Market Presence - The launch of the "360X" carbon plate running shoes and the "160X" model, which helped set a national marathon record, highlights the company's commitment to innovation[30]. - The "160X 6.0 PRO" running shoes launched in August 2024 feature a 6.1% improvement in rebound performance and a 4% increase in running economy compared to the previous generation[71]. - The "260X 2.0" multi-scenario carbon plate running shoes were released in December 2024, enhancing running economy and rebound performance[72]. - The "360X" running shoes, launched in March 2024, became one of the best-selling models, leveraging advanced technologies for improved performance[75]. - The launch of new high-performance products includes "TRIUMPH 22," "ENDORPHIN PRO 4," "ENDORPHIN SPEED 4," and "HURRICANE 24," alongside a new apparel line to meet diverse consumer needs[109]. Market Engagement and Community Involvement - Xtep has sponsored a total of 44 top marathons and road running events across China in 2024, including the prestigious Xiamen Marathon, which has been sponsored for 16 consecutive years[81]. - The Xtep running community has over 2,200,000 members and more than 5,900 running teams, enhancing community engagement and brand loyalty[86]. - The "Run the Yellow River" event attracted over 60,000 participants, covering 5,500 kilometers across 8 provinces and 30 cities, marking a significant milestone in community engagement[85]. - The company donated over RMB 58 million in sports goods and cash in 2024, including RMB 10 million in winter supplies for earthquake relief in Tibet[115]. Financial Performance and Efficiency - Gross profit for 2024 was RMB 5,865.4 million, reflecting a gross margin of 43.2%, up from 41.8% in 2023[38]. - The overall gross margin improvement was supported by strong e-commerce performance and the integration of acquired businesses into the group's operations[148]. - Selling and distribution expenses rose to RMB 2,867.9 million, accounting for 21.1% of total revenue, up from RMB 2,654.9 million or 20.8% in 2023, driven by higher advertising and promotional costs[150]. - General and administrative expenses increased to RMB 1,427.6 million, representing 10.5% of total revenue, compared to RMB 1,302.1 million or 10.2% in 2023, mainly due to higher employee costs and related expenses[151]. - The company recorded a decrease in corporate segment losses to RMB 67.2 million from RMB 101.4 million in 2023, primarily due to lower share-based payment expenses[155]. Sustainability and Corporate Responsibility - The introduction of eco-friendly materials in product lines, such as recycled fibers, demonstrates Xtep's commitment to sustainability[95]. - Xtep International Holdings achieved an MSCI ESG rating upgrade to "A" in July 2024, reflecting significant progress in labor standards and corporate governance[112]. - Xtep's 2030 ESG strategy aims to reduce absolute greenhouse gas emissions by 42% by 2030 and achieve carbon neutrality by 2050[113]. - Xtep's self-operated factories increased renewable energy usage by 95%, promoting green transformation in production processes[118]. Operational Adjustments and Future Outlook - The company is strategically adjusting its borrowing structure, favoring RMB loans over HKD loans to leverage lower interest rates in mainland China[192]. - The company is actively communicating with investors to restore confidence amid macroeconomic uncertainties and weak retail sales[200]. - The company aims to streamline its business structure following the KP sale, concentrating resources on its profitable brands[196].

Financial Data and Key Metrics Changes - Total group revenue increased by 6.5% to JPY 13,577,000,000 [10] - Operating profit rose by 9.3% to JPY 1,966,000,000 [11] - Net profit increased by 20.2% to JPY 1,238,000,000, with a net profit margin up by one percentage point to 9.1% [13] - Gross profit margin improved by 1.4 percentage points year on year to 43.2% [12] Business Segment Data and Key Metrics Changes - Revenue from the core brand increased by 3.2% to JPY 12,327,000,000 [17] - Professional Sports segment revenue, including Saucony and Merrell, grew by 57.2% to JPY 1,250,000,000 [18] - Saucony's revenue increased by nearly 60%, surpassing JPY 1,000,000,000 [19] Market Data and Key Metrics Changes - E-commerce revenue grew by 20% year on year, accounting for 30% of core brand revenue [28] - Saucony's revenue growth over the past five years has exceeded 100% CAGR [29] Company Strategy and Development Direction - The company will continue to focus on running and develop professionalism and refinement in its offerings [6] - A proactive approach will be taken to enhance operational efficiency and deepen end channel management [6] - The company aims to solidify its market status as the number one running brand in China through brand synergy and product matrix [24][33] Management Comments on Operating Environment and Future Outlook - The macroeconomic environment remains uncertain, but opportunities exist due to the national fitness boom [4] - Management expressed confidence in achieving high-quality growth and lucrative returns for investors [6] - The company plans to increase investment in DTC (Direct-to-Consumer) strategies to drive growth [35] Other Important Information - The company announced new appointments to strengthen its management structure, with Mr. Ricky Yang promoted to Executive Director and Ms. Donna Ding appointed as CFO [7] - The company has been recognized with an MSCI ESG rating upgrade to A, marking it as the first Chinese sports goods company to receive such a rating [32] Q&A Session Summary Question: What are the growth expectations for Saucony in 2025? - Saucony expects revenue growth of around 30% to 40% in 2025 [19] Question: How does the company plan to manage expenses moving forward? - The company will focus on controlling expenses while enhancing retail and inventory management capabilities [22]

Financial Data and Key Metrics Changes - Total group revenue increased by 6.5% to JPY 13,577,000,000 [10] - Operating profit rose by 9.3% to JPY 1,966,000,000 [11] - Net profit increased by 20.2% to JPY 1,238,000,000, with a net profit margin up by one percentage point to 9.1% [13] - Gross profit margin improved by 1.4 percentage points year on year to 43.2% [12] Business Line Data and Key Metrics Changes - Core brand revenue grew by 3.2% to JPY 12,327,000,000, with kids' segment growth exceeding 20% [17] - Professional Sports segment revenue, including Saucony and Merrell, grew by 57.2% to JPY 1,250,000,000, with Saucony's revenue increasing almost 60% [18] - Saucony's gross profit increased by 61.5%, with an operating profit of JPY 78,000,000 [19] Market Data and Key Metrics Changes - E-commerce revenue for the core brand increased by 20% year on year, accounting for 30% of core brand revenue [28] - Saucony's revenue exceeded JPY 1,000,000,000, marking significant growth in both scale and profits [29] Company Strategy and Development Direction - The company will continue to focus on running and develop professionalism and refinement in its offerings [6] - A clear strategy to enhance operational efficiency and deepen end channel management for high-quality growth was outlined [6] - The company aims to solidify its market status as the number one running brand in China through brand synergy and a professional to mass influence strategy [24][33] Management Comments on Operating Environment and Future Outlook - The management acknowledged ongoing macroeconomic uncertainties but highlighted opportunities in the sports goods industry [4] - The company expressed confidence in achieving high-quality growth and generating lucrative returns for investors [6] - Future expectations include a revenue growth of around 30% to 40% for Saucony in 2025 [19] Other Important Information - The company announced new appointments to strengthen its management structure, with Mr. Ricky Yang promoted to Executive Director and Ms. Donna Ding appointed as CFO [7] - The company received an upgraded MSCI ESG rating to A, becoming the first Chinese sports goods company to achieve this [32] Q&A Session Summary Question: What are the growth expectations for Saucony in the coming years? - Management expects Saucony to achieve revenue growth of around 30% to 40% in 2025 [19] Question: How does the company plan to manage expenses moving forward? - The company will focus on controlling expenses while enhancing retail and inventory management capabilities [22] Question: What is the company's strategy regarding e-commerce? - E-commerce will continue to be a key growth driver, with significant performance on emerging platforms [28]

Summary of Conference Call Company and Industry - The conference call primarily discusses the performance and strategies of a footwear and apparel company, particularly focusing on its brands such as Saucony and Hoka, within the broader context of the sportswear industry. Key Points and Arguments Financial Performance - The company reported a significant improvement in sales performance in October compared to Q3, with both online and offline channels experiencing double-digit growth [1] - The company anticipates that Q4 discounts will be slightly deeper, estimated between 70% to 75%, but inventory levels are healthy, around four months [2] - Despite revenue pressures, the company aims for over 20% profit growth, focusing on controlling marketing and R&D expenses [3] Brand Performance - Saucony and Hoka brands are experiencing rapid growth, with Saucony's revenue exceeding 1 billion yuan by the end of October [4] - The company plans to open 20 to 30 new stores in the upcoming year, with a focus on larger store formats due to an expanded product line [5][15] - The company is diversifying its product offerings, including functional apparel and lifestyle products, to attract a broader customer base [5][17] Market Trends - The company noted a shift in consumer behavior, with a growing segment prioritizing value for money rather than just low prices [7] - The running market in China is recovering, with participation in marathons returning to pre-pandemic levels, indicating a strong demand for running shoes [9] - The company holds a market share of over 20% in the running shoe segment, with Nike at 25% and Saucony at 8% [9] Product Development - The company is focusing on enhancing its product lines, including the introduction of new running shoe models and apparel that cater to both elite and casual runners [19][21] - The latest running shoe models, such as the 360 series, have been well-received, with competitive pricing compared to other brands [21][23] Strategic Initiatives - The company is investing in brand marketing and expanding its e-commerce presence, particularly for the Hoka brand, which is primarily sold online [24][25] - The children's apparel segment is also seeing improvements, with a focus on functional and supportive designs for young consumers [26][27] Future Outlook - The company is optimistic about its growth trajectory, projecting a potential increase in store openings to 30-50 annually if economic conditions improve [16] - The long-term goal includes achieving a 20% operating profit margin within the next 5-6 years as the brand scales and diversifies its offerings [11][12] Other Important Content - The company is actively monitoring macroeconomic factors, including government policies and consumer confidence, which could impact future performance [2] - There is a strong emphasis on maintaining a healthy inventory level to mitigate discount pressures and ensure profitability [2][3] - The company is also exploring international expansion, particularly in Southeast Asia, although current overseas sales represent only about 1% of total revenue [29]