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Xtep's net profit increases; plans for 'Xtep 1+1'
Aug '11
Xtep International Holdings Limited, a leading fashion sportswear enterprise in the PRC, announced its interim results for the six months ended 30 June 2011.

Financial Review
Sustainable Revenue and Profit Growth
During the period under review, the total revenue of the Group was RMB2,570.3 million (2010: RMB2,040.2 million), which represents an increase of approximately 26.0% over the same period last year. Revenue from the Xtep brand increased significantly by 29.0%, reaching RMB2,452.2 million (2010: RMB1,900.8 million). With prudent and efficient cost and supply chain management, the group continued the improvement in gross profit margin despite the continuous inflation environment.

The overall gross profit margin increased to 40.9% (2010: 40.7%), a 0.2 percentage point increase over the same period last year. Profit attributable to shareholders was approximately RMB466.2 million (2010: RMB373.5 million), an increase of approximately 25% over the same period last year. The satisfactory results and the adequate surplus cash balances have resulted in the Board recommending payment of an interim dividend of HKD13.0 cents per Share (2010: HKD10.0 cents per Share), which is an increase of 30% from last year. The payout ratio is approximately 50% (2010: 51%).

With the continued growth of the retail sector including the sportswear industry and the unique sports and entertainment strategy, for the six months ended 30 June 2011, the Group's total revenue from the Xtep brand products surged by 29.0% to approximately RMB2.5 billion (2010: RMB1.9 billion) and the gross profit margin increased by 0.4 percentage point to 40.9% (2010: 40.5%).

The remarkable results of Xtep brand products were mainly attributable to the widespread recognition of the Xtep brand as a result of our sponsoring of a number of high-profile international and national sporting events and its unique entertainment marketing strategy. In addition, as a result of the popularity of Xtep brand products among the general public, the Group has recorded satisfactory sales performance through its expanded sales channels and network.

Thanks to the effective cost inflation control by increasing the amount of inventory purchased and making advanced payment to the outsource supplier, the margin for both Xtep brand footwear and apparel products have been improved. The gross profit margin of footwear improved by 0.8 percentage point to 41.1% (2010: 40.3%), while the gross profit margin of apparel products rise 0.2 percentage point to 40.9% (2010: 40.7%). The Group remained at net cash position, reflecting its healthy financial condition, paving the way for future development.

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Xtep International Holdings Limited

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