Summary of Xtep International Conference Call Company Overview - **Company**: Xtep International - **Key Brand**: Saucony Industry Insights - **Running Shoe Market**: Anticipated growth driven by marathon events in the second half of the year, with Saucony emerging as a leading brand in this segment [2][4] - **Sales Performance**: Saucony's sales in July and August showed improvement over June, indicating a positive market recovery [4][11] Key Financial Metrics - **Sales Growth**: Xtep's main brand revenue grew by 4.5% in the first half of the year, primarily driven by volume increases rather than price adjustments [8] - **Sales Volume**: Expected total sales for the year are projected to reach 60 million pairs, with the Champion series expected to sell 8 million pairs, doubling from last year [2][6] - **Inventory Turnover**: Maintained at a healthy level of 4 to 4.5 months, with discounts stable at 30% to 32% [2][5] Product Strategy - **Product Range**: The product matrix includes high-end carbon plate shoes, mid-range options, and a mass-market series priced between 200 to 500 RMB [6][9] - **High-End Segment**: High-end running shoes are expected to account for over 10% of total sales, reflecting a growing demand for premium products [7] - **DTC Model**: All stores are now direct-to-consumer (DTC), enhancing operational efficiency and responsiveness to market changes [15][12] Marketing and Sponsorship - **Marketing Investment**: Xtep allocates 11% to 13% of revenue for marketing, with a significant portion directed towards marathon sponsorships [10] - **Brand Positioning**: Focus on high cost-performance and functional products to meet diverse consumer needs, particularly in urban areas [9][10] Future Outlook - **Revenue Projections**: Saucony's revenue is expected to grow by 30% to 40% this year, with a target of reaching 2 billion RMB in three years [4][22] - **Store Expansion**: Plans to open 30 to 50 new stores, with a focus on core urban areas, aiming for improved store efficiency [3][11] - **Product Development**: Continued emphasis on high-quality, functional products to cater to both casual and serious runners [9][20] Supply Chain and Production - **Supply Chain**: Saucony's international products are produced in Cambodia and Vietnam, while domestic products are entirely manufactured in China [16] - **SKU Expansion**: Increasing the number of SKUs in stores to enhance product variety and meet consumer demand [11] Additional Insights - **Children's Apparel**: Stable performance in children's clothing with no significant expansion plans, maintaining a good sales level [19] - **Future Acquisitions**: No current plans for acquiring additional running brands, focusing instead on maximizing the potential of existing brands [21] Conclusion Xtep International is positioned for growth in the running shoe market, leveraging its strong brand presence, effective marketing strategies, and a focus on product quality and consumer needs. The company anticipates significant revenue growth and improved profitability in the coming years.

Core Viewpoint - The collaboration between Rod Dixon and Saucony emphasizes a new perspective on victory, focusing on the wisdom of pacing and endurance rather than just speed [3][12]. Group 1: Brand Philosophy and Strategy - Saucony's philosophy is centered around the idea of "Elite poise," which combines professional performance with a calm mindset, redefining victory as a journey rather than a destination [16]. - The brand aims to resonate with elite professionals by promoting a lifestyle that values stability and long-term progress over immediate results [24][27]. - The concept of "Negative Split" is not only applicable in running but also in business strategy, where a slower buildup can lead to greater success [18]. Group 2: Market Position and Growth - The running shoe market in China has seen significant growth, with over 300 million participants in road running and a market size reaching 92 billion yuan, growing at a compound rate of 13% [13][24]. - Saucony has achieved a remarkable compound annual growth rate of 106% since re-establishing its direct sales in China, with projected sales exceeding 1 billion yuan in 2024 [24]. - The brand's direct-to-consumer (DTC) model has allowed for faster product iterations and a closer alignment with consumer needs, enhancing its competitive edge [24]. Group 3: Product Innovation - The latest Saucony flagship shoe features PWRRUN PB foam, making it the lightest in its series, with a 10% increase in midsole width for improved cushioning [19][20]. - Third-party lab tests indicate that the new flagship shoe has a 3-5% lower average energy consumption compared to competitors, emphasizing a focus on stable performance rather than just speed [22]. - The brand's commitment to sustainability is evident through initiatives like the Run for Good fund, which incorporates recyclable materials into its products [27]. Group 4: Cultural Impact and Community Engagement - Saucony's history and evolution from providing work boots to becoming a symbol of elite running culture reflect its deep-rooted connection to the running community [26][27]. - The brand's narrative has shifted from merely being a performance gear provider to becoming a cultural symbol that resonates with the lifestyle of modern professionals [27]. - The emphasis on a balanced approach to running, where the process is valued as much as the outcome, aligns with the growing consumer demand for a more sustainable and thoughtful approach to success [28].