2025-05-26 15:17Summary of Xtep International Conference Call Company Overview - Company: Xtep International - Brands: Xtep main brand, Saucony Key Points Industry and Market Performance - Xtep's main brand maintains a healthy discount level of approximately 70-75% and an inventory turnover of about 4 months [2][3] - The impact of US tariffs on Xtep is minimal, as the main brand has less than 1% market share in the US, with overseas business primarily in India and Vietnam [2][4][5] Inventory and Sales Strategy - The company plans to clear inventory during the 618 promotional period while maintaining healthy discount levels [2][6] - Xtep aims to recover 400-500 stores for a Direct-to-Consumer (DTC) transformation, with 100-200 stores expected to be recovered in the second half of 2025 [2][8] DTC Transformation - The DTC strategy is driven by the retirement of some distributors and the need for direct market feedback [10][11] - Initial revenue impact from the DTC transition is expected to be a low single-digit percentage decline due to the need to reclassify wholesale revenue [9][10] - The long-term goal is to improve operational efficiency and increase profit margins through the DTC model [10][11] Saucony Brand Development - Saucony plans to open 30-40 new stores in 2025, aiming for a total of 180-190 stores, focusing on high-end malls in first-tier cities [4][12] - The brand targets a revenue doubling to 2 billion RMB by 2027, with a projected growth of 30-40% in 2025 [4][16] - Saucony's product offerings will expand to include more casual and apparel items, with a goal to increase apparel's share from under 20% to around 30% [24] Competitive Landscape - Xtep faces competition from brands like Anta, which has introduced super stores with lower price multipliers [18] - The company operates its own outlet stores, recovering inventory from distributors and selling at discounted prices [19] Financial Outlook - Xtep expects a net profit growth of over 10% in 2025, with a focus on inventory control and operational efficiency [20][28] - The company anticipates Saucony will achieve a growth rate of 30-40% in 2025, with a net profit margin of at least 10% [28] Marketing and Brand Strategy - The marketing strategy includes celebrity endorsements and sponsorships to enhance brand visibility, with a significant investment in advertising [17] - The company is adjusting its store formats to include larger spaces (200+ square meters) to improve sales efficiency [17][21] Supply Chain and Production - Approximately 70% of Xtep's footwear is outsourced, while 90% of apparel is produced externally [5] - Saucony's products are designed by a local team, with 60% of products produced internationally and 40% developed locally [26][27] Consumer Demographics - The introduction of more women's apparel is expected to increase the female consumer ratio, which is currently dominated by male customers [25] Additional Insights - The DTC model allows for quicker market response and operational adjustments, enhancing overall efficiency [11] - The company is focused on maintaining a balance between brand development and shareholder interests, ensuring sustainable growth [20]