Financial Data and Key Metrics Changes - In 2023, total revenue grew by 10.9% to JPY 14.346 billion, marking a historical high [11] - Core Xtep brand revenue increased by 7.4% to JPY 11.947 billion, while new brands, including Saucony and Merrell, saw revenue growth of nearly 100% at almost JPY 800 million [12] - The group's profit reached a historical high of JPY 1.03 billion, up 11.8% year on year, with a net profit margin of 7.2% [13][17] - Inventory decreased significantly by 21.6% to JPY 1.794 billion, indicating improved inventory management [14][21] Business Line Data and Key Metrics Changes - The core Xtep brand achieved a retail sell-through growth of 20% year on year, with inventory turnover days at a healthy level of 4 to 4.5 months [6][10] - The Professional Sports segment, including Saucony and Merrell, reported nearly 100% revenue growth, with Saucony becoming the first profitable brand among the four brands [12][26] - The Athletia segment experienced a revenue growth of 14.3% [12] Market Data and Key Metrics Changes - In the China region, Saucony's revenue growth exceeded 200%, reaching JPY 465 million [12] - The athleisure segment, including K Swiss and Palladium, saw a revenue growth of 14.3%, primarily driven by the Chinese market [27] - The gross margin for the athleisure segment improved from 37.6% to 44.8% due to increased direct-to-consumer (DTC) sales [28] Company Strategy and Development Direction - The company aims to maintain its position as the number one running brand in China, focusing on product innovation and expanding its market segment [35][50] - The strategy includes leveraging synergies between core and new brands, with a focus on high-end markets for new brands [8][51] - The company plans to continue enhancing its offline store experience while expanding its online presence [50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2023 was a challenging year but expressed confidence in achieving considerable growth despite a difficult economic environment in 2024 [17][24] - The target for 2024 is a revenue growth of no less than 10%, with a focus on maintaining healthy inventory levels [18][24] - Management noted that the consumption situation remains uncertain, but they are prepared to react quickly to market changes [24] Other Important Information - The company has maintained a consistent dividend payout ratio of 50% since its listing in 2008 [15] - Operating cash net inflow grew by 1.2 times to JPY 1.255 billion, exceeding net profit [15] - The company has successfully remitted JPY 1 billion to Hong Kong for dividend payouts and debt repayment [20] Q&A Session Summary Question: What are the growth prospects for Saucony and Merrell? - Management indicated that Saucony and Merrell are expected to achieve significant growth in 2024, with sales targets set at 30% to 40% growth [26] Question: How does the company plan to manage inventory levels? - The company emphasized the importance of maintaining healthy inventory levels and has successfully reduced inventory by 21.6% [14][21] Question: What are the expectations for the athleisure segment in 2024? - Management stated that while the athleisure segment will continue to incur losses, they will control the amount of loss to ensure it does not exceed previous years [30]
XTEP INT'L(01368) - 2023 H2 - Earnings Call Transcript