361 Turnover of the first half of 2016 increased by 15.7%
Continue to deepen the five major businesses to promote business development
361 Degree 2016 Interim Results Announcement Conference
On August 16th, the stock price of 361° rose by 5.10%.
(Hong Kong, August 16, 2016) – China's leading sports brand company, 361 Degrees International Limited (“361°†or “Companyâ€, and its subsidiaries, collectively referred to as “Groupâ€; Hong Kong Stock Exchange The stock code: 1361) is pleased to announce its unaudited interim results for the six months ended 30 June 2016.
financial analysis
The Group's turnover in the first half of 2016 increased by 15.7% to RMB 2,555.5 million (1H2015: RMB 2,208.3 million), which was mainly driven by the Group's order growth in the first half of 2016. It reflects that China's sportswear industry has entered a stage of steady growth. The sales volume of the major product groups continued to improve. Among them, as the Group focused more on footwear products, the sales volume and average wholesale selling price of this segment increased significantly, and the proportion of sales to turnover increased to 45.1%. Inner apparel sales accounted for 41.2% of turnover. In addition, the revenue of 361° children's wear continued to grow strongly, increasing by 16.5% to RMB 272.1 million (first half of 2015: RMB 233.5 million), accounting for 10.7% of the Group's turnover; reflecting that the children's wear business has established mature customers. Foundation, and the growth potential is huge.
Gross profit for the first half of 2016 was RMB 1.059 billion (first half of 2015: RMB 911.3 million), and gross profit margin increased slightly by 0.1 percentage point to 41.4%. During the period under review, the gross profit margin of footwear decreased by 0.3 percentage points to approximately 40.7%. The gross profit margin of the apparel and children's wear business increased to 43.1% and 43.0% respectively.
During the period under review, the Group's turnover increased by 43.3% to RMB219.7 million (1H2015: RMB153.2 million), representing approximately 8.6% of the Group's turnover (first half of 2015: 6.9%). The increase was mainly attributable to the increase in research and development expenses, the increase in the management staff's salary increase in overseas business units and the depreciation cost incurred in Xiamen's new headquarters. The research and development expenses increased to RMB72.4 million (1H2015: RMB54.4 million), representing 2.8% of the turnover during the period under review (1H2015: 2.5%). The promotion and promotion expenses increased by 15.4% to RMB 310.9 million (first half of 2015: RMB 269.4 million), accounting for approximately 12.2% of the turnover.
As at 30 June 2016, accounts receivable aged within 90 days accounted for more than 89.3% (first half of 2015: 75.7%), and no accounts receivable were aged over 180 days.
The Group's profit before taxation was RMB 42.72 million (first half of 2015: RMB 422.7 million).
After deducting income tax expense of RMB149.7 million, profit attributable to equity holders increased by 1.3% to RMB273.1 million (first half of 2015: RMB269.6 million), representing an equivalent of 13.2 cents per share.
During the period under review, the Group's net cash from operating activities was RMB 372.4 million (first half of 2015: RMB 233.1 million). Net cash (including deposits and cash equivalents) was RMB 2.5 billion (first half of 2015: RMB 2.7 billion). Faced with the continued growth of the sportswear industry, the Group's strong financial position will help it seize the opportunities of business development.
In view of the Group's satisfactory performance, the Board of Directors declared an interim dividend of RMB 5 cents per share (first half of 2015: RMB 5) and a special dividend of RMB 5 cents per share. In the future, the Group will strive to steadily increase the dividend payout ratio in return for the long-term support of shareholders.
Operational highlights
In the first half of 2016, 361° continued to deepen the market for functional sports products for the Chinese public, relying on the multi-brand strategy of 361°, 361° children's wear and outdoor brand ONEWAY to capture sales opportunities in different channels. As of June 30, 2016, the Group's authorized network in China had 6,853 stores. The Group will continue to focus on building a sustainable business profit model, increasing investment in product research and development, category segmentation, and upgrading terminal payment methods to enhance store profitability and profitability. The Group currently encourages distributors to develop larger-scale compound stores (joining 361° children's clothing products) to attract more people to the store to further increase sales. 361°'s same-store sales achieved a high single-digit climb for six consecutive quarters, showing that a number of measures have achieved significant results.
In the first half of 2016, the total number of 361° children's wear points reached 2,416, of which 1,134 were located at the 361° main brand store. During the period, children's wear sales continued to grow steadily, and related income has accounted for 10.7% of the group's revenue. 361° children's wear is recognized in the industry and consumers. During the period under review, the Group's children's wear business has won many awards, including “3.15 China's consumer market industry influence brandâ€, “China's top ten children's wear brand†and “China†The best children's wear brand." The country has fully implemented the two-child policy. It is believed that the potential consumer groups will continue to grow in the future and the market will continue to expand. The Group is confident that the children's wear brand will continue to grow bigger and stronger.
In view of the increasing consumption of online and mobile shopping in recent years, the Group is also focusing on building its modern e-commerce. In addition to online sales on the official website, the Group has also entered China's major e-commerce platforms such as Tmall, Taobao, Jingdong and Vipshop. The Group launched online exclusive products through e-commerce, such as children's smart children's shoes that cooperated with Baidu, and the newly launched "361°+iMate intelligent running shoes" series, which achieved independent brand differentiation and formed a line of e-commerce and retail stores. Up and down synergy. During the period under review, the turnover of the Group's online products for sale to e-commerce distributors was RMB 166.4 million (first half of 2015: RMB 62.4 million), accounting for 6.5% of the Group's total turnover (2) First half of 2015: 2.8%). In the future, the Group will continue to promote the online sales of modern e-commerce and develop it into an important part of the Group's revenue.
The Group is committed to strengthening product innovation and conducting comprehensive research and development in smart products to capture market share with versatile and cost-effective products. In the second half of 2015, the iMate intelligent running shoes series, which was independently developed by the Group, combines the three elements of shoes, smart chips and mobile application “APP†to enhance the running experience with excellent functionality and advanced technology. This series of smart running shoes was launched in May 2016, and the response was enthusiastic after the launch of the product. At the same time, the Group continues to optimize its research and development capabilities, continuously optimize product design in fashion design, molding and fabric selection, and introduces cutting-edge patented fabrics in various footwear products, striving to achieve product differentiation goals.
To further diversify its business and explore its growth potential, the Group is also fully expanding its new business and opening up overseas markets. As of June 30, 2016, the Group has established wholly-owned subsidiaries in Brazil and the United States to develop overseas operations and has 908, 180 and 52 points of sale in Brazil, the United States and Europe respectively. At the 2016 Brazil Olympic and Paralympic Games, the group also appeared as the official secondary sponsor of Rio, and supported many athletes and delegations to compete in the Olympics. As the first Chinese sports brand to sponsor such a large-scale world sports event, this will not only benefit the Group's overseas promotion, but also expand its brand awareness and establish a high-quality brand image in overseas markets, pushing the brand value to the peak. During the period under review, the Group's overseas business sales growth more than doubled to RMB 45.2 million (first half of 2015: RMB 20.5 million), accounting for approximately 1.7% of the Group's total turnover. In the next three to five years, the Group will invest heavily in the rapid development of its overseas business. The Group also expects that international business will increasingly become an important source of revenue contribution to the Group.
After Beijing successfully applied for the 2022 Winter Olympics, the Chinese government has promoted the public's awareness of the snow and ice movement through the implementation of the “300 million people involved in the snow and ice sports programâ€. It is expected that the public will be interested in winter sports and even related sports equipment. Demand will increase. It is expected that the high-end brand ONEWAY of the ice and snow sports under the Group will continue to benefit. As of June 30, 2016, ONEWAY has opened 65 self-operated stores in 29 first- and second-tier cities in China. The Group will continue to open stores in the future to lay the foundation for rapid development.
Since 2015, the central government has introduced a number of reforms to promote the development of football, including the adoption of the "China Football Reform Master Plan", and in April 2016, the National Development and Reform Commission issued the "China Football Medium and Long-Term Development Guidelines". It is expected to significantly increase the public's attention to this sport. The Group officially launched its football products in September 2015. Its rapid execution and product professionalism have once again been highly praised by the market. 361 ° also signed the Chinese national football team forward Yang Xu, vigorously promote the football product line. In the future, the Group will strengthen research and development and launch more professional and cost-effective football equipment products to meet the national policy and strive to promote the popularization of football.
Future prospects
In June this year, the State Council promulgated the "National Fitness Program 2016-2020", which aims to promote the total scale of sports consumption in 2020 to reach 1.5 trillion yuan. Looking ahead, the scale of the sports industry will be further expanded, and the demand for professional sportswear will also increase steadily. In the face of fierce competition in the industry, 361? is full of confidence in the Group's development prospects. The Group will continue to promote product innovation and R&D to achieve product differentiation to maintain its leading position in the industry. In addition, the Group will expand modern e-commerce and online sales in an all-round way, promote its new brand ONEWAY, etc., and improve overall operational efficiency, achieve long-term profit model, and consolidate the Group's leadership position.
Mr. Ding Wu, President of 361 Degrees Group, concluded: “361° will continue to target the mass market and build a sustainable business profit model, and will continue to use product differentiation strategies to leverage multi-brand advantages to meet the needs of different consumers. ° will continue to consolidate its main products in the running category, and focus on the development of business projects with broad prospects such as football and snow sports. At the same time, the Group will vigorously develop its overseas business and continue to compete with international brands for its superior product strength. The Group will continue to increase the proportion of e-commerce products and expand sales of this channel. We will continue to focus on product development and maintain leading position with cutting-edge technology. The Group supports the Brazilian Olympic and Paralympic Games as an official sponsor, I believe there will be Help our brand to win more reputation in the international market, and take this event to push the brand to the peak!"
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