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361 Degrees Announces Operational Highlights for the Quarter Ended 30 September 2011

2011-10-17 17:54 1339

HONG KONG, Oct. 17, 2011 /PRNewswire-Asia/ -- 361 Degrees International Limited ("361 Degrees" or the "Company", together with its subsidiaries, the "Group"; HKSE stock code: 1361), one of the leading sports brand enterprises in China, is pleased to announce the following operational highlights for the quarter ended 30 September 2011:

  • Same store sales for this third quarter grew by 14.1%
  • Number of retail outlets increased to 7,810 as at 30 September 2011, with a total retail space of 784,745 square metres
  • Discounting at the retail level widened slightly to about 22%
  • At 30 September 2011, the inventory in the channel, including that of distributors represented 3.8 times average monthly sales
  • e-POS connectivity is completed for 4,529 outlets

During this quarter, the Company primarily invoiced sales arising from the 2011 Autumn and Winter Trade Fairs as well as the remaining deliveries from the Spring/Summer Trade Fair. As previously mentioned, the wholesale discount to distributors from the Autumn Trade Fair has been reduced to 60%, which is the applicable price for most of this quarter's deliveries.

On the back of the great publicity gained at the recent major sporting events in China, the 16th Asian Games and the 26th Summer Universiade, sales momentum remained strong throughout the quarter, particularly in August. From sales data gathered through 3,075 stores, all of which had been in operation since 1 July 2009, i.e. for more than 24 months, the same store sales growth was 14.1%. This is highly encouraging despite earlier discounting at many locations as a result of intense competition and destocking of old supplies by some companies. The bulk of this increase is attributable to volume.

Sales were particularly robust from stores in the Northern and Western Regions and there was also a surprisingly strong performance in the Eastern Region. The sales in the Southern Region, however, were relatively flat although the absolute turnover at the sales tills remained the highest in the country. Sales weakened considerably in September, as in the past, because of the impending change in season and an increasingly competitive environment.

In terms of category, retail sales for the quarter showed a 52:46 split between footwear and apparel, with accessories accounting for the remainder.

Quarterly stock counts at 5,288 stores throughout the country indicated that the channel inventory at the end of September was 3.8 times that of the average monthly sales, with apparel accounting for about 53% of this total by value.

A total of 173 new in stores were opened during this quarter, with generally benign weather aiding this process. Leases in respect of 44 stores were not renewed, most of which were below the Company's average standard of 100 sq. metres. The Group now has a total franchised network of 7,810 stores, all of which are operated by independent third parties.

This total excludes another 929 361 Degrees Kids stores, as this sub-brand is run separately. The roll-out of this new business continued to progress very satisfactorily, with 163 new point-of-sales added during this quarter. The average size of a typical 361 Degrees Kids store is only about 40 square metres and by concentrating on the bigger cities with a higher level of consumer spending, the Company hopes to attain a national leadership status very soon.

The Group continues to monitor the performance of its stores very carefully as it subscribes to the business philosophy that retailers carry the human face of the brand. From data downloaded from the e-POS system in respect of 608 stores across six cities Shanghai, Zhengzhou, Fuzhou, Jinan, Shijiazhuang and Guangzhou, sales in the Golden Week from October 1-7 showed a commendable 17.6% uplift, from the same period last year.

Whilst the Group is pleased with these achievements in the third quarter, it is also wary of recent developments in the industry as well as the effects of a prolonged credit tightening in the overall economy and inflation still persisting at a higher level so far in 2011. It will continue to actively adopt measures to ensure that its retailers could continue to operate profitably.

For more detailed information, please contact Mr. Y F Chen of Investor Relations at yuanfeng@361sportshk.com.

About 361 Degrees International Limited

361 Degrees International Limited is one of the leading sports brand enterprises in China, possessing brand marketing, research and development, design, manufacturing, distribution and retail capabilities. The Group's products include footwear, apparel, accessories and equipment for sport and leisure uses. The Group has established an extensive supply chain management system through proprietary and sub-contracted manufacturing operations; and an exclusive distribution and retail network in China through distribution via authorized distributors.

For further information, please contact:

iPR Ogilvy LTD.

Natalie Tam/ Charis Yau/ Summer Si/ Janis Lai
Tel: +852-2136-6182/ 2136-6183/ 2136-6953/ 2169-0646
Fax: +852-3170-6606
Email: natalie.tam@iprogilvy.com / charis.yau@iprogilvy.com / summer.si@iprogilvy.com / janis.lai@iprogilvy.com

Source: 361 Degrees Company Limited
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