omniture

361 Degrees Announces its 2010/11 Interim Results

2011-02-22 16:16 1169

Profit attributable to equity holders rose 18.5% to RMB422.8 million

HONG KONG, Feb. 22, 2011 /PRNewswire-Asia/ --

Financial Highlights

  1. Turnover increased by 29.5% year on year to RMB 2,275.4 million.
  2. Gross profit margin improved by 4.4 percentage points to 44% as the Group benefitted from higher ASPs as well as lower outsourced costs from its suppliers.
  3. Profit attributable to equity holders improved by 18.5% year on year to RMB422.8 million.
  4. Earnings per share (diluted) is 20.4 cents.
  5. An interim dividend of RMB7.1 cents (equivalent to HK8.3 cents) per share has been declared and will be payable by 31 March 2011.

Financial Overview

RMB '000 For the six months
ended 31 December
Change
2010  2009
Turnover 2,275,363  1,757,157 29.5%
Gross profit 1,000,830  696,279 43.7%
Operating profit 496,200  401,228 23.7%
Profit attributable to equity holders 422,775  356,751 18.5%
Diluted EPS (RMB cents) 20.4  17.3 17.9%
Interim dividend per share (HK cents) 8.3  4.9 69.4%

361 Degrees International Limited ("361 Degrees" or the "Company", together with its subsidiaries, the "Group"; HKEx stock code: 1361), one of the leading sports brand enterprises in China, reported a set of robust interim results for the financial year 2010/11, reflecting the overall strength of the sportswear industry in China as well as the successful inroads the Group had made to capture this momentum.

The Group posted a solid year-on-year increase of 29.5% in turnover for the six months under review, which is higher than both the overall growth trend of the sportswear segment as well as the retail sector in China. Continuing efforts in promoting the 361 Degrees brand through advertising, national-team and event sponsorships have resulted in greater brand awareness and recognition as reflected in both retail sales volume and prices.

The new children's collection launched in the beginning of 2010 contributed about RMB124.3 million or 5.5% to the Group turnover during the period under review, an encouraging development considering this is the initial phase of operations. By the end of December, a total of 487 outlets have been established throughout the country, of which 133 are dedicated corners within existing stores.

Profit attributable to equity shareholders for the six months under review rose by 18.5%, as the better gross margins enabled the Group to offset a generally higher operating cost base as well as a higher income tax rate. The resultant earnings per share, on a fully diluted basis, at 20.4 cents, is a 17.9% improvement. On the back of this credible result, the Board of Directors has declared an interim dividend of 8.3 HK cents, equivalent to a dividend pay-out ratio of about 35%, which will be payable by 31 March 2011.

In the interim period under review, sales of footwear accounted for about 54% of the turnover, with single digit improvements in both volume and ASPs, as the Group continued to offer a wider range of products to the market, with improved designs and higher price points. For apparel sales, the growth in volumes, a substantial 51%, was even higher and the Group leveraged on this enlarged capacity to use bigger OEM suppliers and secure significantly higher gross margins (43.6% vs 38.6% for the same period last year). This is despite the overall ASP for the apparel segment in this period under review being lower, because of a higher proportion of cheaper-priced deliveries from the Spring/Summer Fair. Also of a credible note is the contribution from the limited edition series to coincide with the Guangzhou Asian Games in November last year, which boosted the ASP of the 2010 Winter Collection, as has previously been reported.

The Group continued to establish very close rapport with its distributors and mindful of the general property market, took every advantage to sensibly increase its franchised network. As at 31 December 2010, the Group maintained its 32 independent exclusive distributors which in turn oversaw 3,459 authorized dealers. In this interim period, there was a net addition of 336 outlets which by the end of December had climbed to 7,263. This number excludes the 354 stores that are opened specifically to cater for the kidswear business.

Such a strong nation-wide presence is a competitive advantage and during the interim period, the Group accelerated its efforts to install electronic points-of-sale ("ePOS") terminals at these stores to provide direct access to key retail sales statistics and consumption patterns. By December 2010, this ePOS had already extended its coverage to all outlets in 9 provinces, namely, Gansu, Fujian, Shanxi, Beijing, Hebei, Sichuan, Yunnan, Guangdong and Hainan, totaling about 2,500 outlets. It is targeted that the entire distribution network will be covered by ePOS by June 2012.

Looking ahead, the Group believes that China's ongoing rapid economic growth and urbanization will continue to maintain a favourable environment for the sportswear sector in China as disposable income of urban residents rise to new levels. The Group is also fortunate in that it has been a strong order book in the recent trade fairs whilst at the same time, there is strong momentum in same store sales at its outlets, in turn ensuring continuity in future demand.

Mr. Ding Wuhao, the Company's President and Executive Director, said: "We envisage that against a backdrop of rising inflation in China, the next challenge for sporting goods industry participants will be how retail, sourcing and manufacturing efficiency can be enhanced to keep costs under control, while continuing to invest in better products and branding to maintain customers' awareness. To this end, 361 Degrees is proud to have been able to solidify our achievements in the past and leverage the momentum to drive the R&D, and advertising and sales activities going forward.

"We shall to plough resources to develop the 361 Degrees Children's Collection. 361 Degrees' foray into this area encouraged industry peers to follow suit, yet generally in a less-focused manner. Our forward-looking decision to establish separate order fairs, manufacturing and distributor network for this collection will better ensure its success. The Group continues to believe that this collection will become a major driver for the Group going forward."

About 361 Degrees Company Limited

361 Degrees Company Limited is one of the leading sports brand enterprises in the 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, and exclusive distribution and retail network in the PRC primarily through in-house and outsourced manufacturing operations and distribution via authorized distributors.

For further information, please contact:

iPR Ogilvy LTD.
Natalie Tam/ Charis Yau/ Summer Si/ Janis Lai
Tel: +852-2136-6182/ +852-2136-6183/
  +852-2136-6953/ +852-2169-0646
Fax: +852-3170-6606
Email: natalie.tam@iprogilvy.com / charis.yau@iprogilvy.com /
  summer.si@iprogilvy.com / janis.lai@iprogilvy.com 
 
361 Degrees International Limited
Chen Yuanfeng
Tel: +852-2907-7033
Email: yuanfeng@361sportshk.com / yuanfengchen@yahoo.com 
Source: 361 Degrees International Limited
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