Financial Highlights - Second quarter ended June 30, 2012
· Revenue was RMB562.0 million (US$88.3 million), representing a 24.2% year-over-year decrease.
· Gross profit was RMB162.0 million (US$25.5 million), representing a 29.6% year-over-year decrease. Gross margin was 28.8%, representing a 2.2 percentage point decrease as compared to 31.0% for the second quarter of 2011.
· Operating profit was RMB35.5 million (US$5.6 million), representing a 67.7% year-over-year decrease.
· Net profit was RMB30.0 million (US$4.7 million), representing an 81.1% year-over-year decrease.
Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "As anticipated, our results in the second quarter were impacted by weakening consumer demand in China, which was largely attributable to the domestic and global economic slowdown.
“As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue. In response to the prevailing market conditions, we began in the second quarter to proactively limit production and delivery of products to better manage inventory levels at our distributors.
“Despite the unfavorable operating environment, we managed to outperform our revenue guidance for the quarter, supported by our ongoing brand building and marketing initiatives which have continued to raise the degree of market recognition of the Xidelong brand name and the average selling prices of our products, especially in our footwear segment."
"While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen brand awareness.
“Our priorities for the remainder of this year will focus on strengthening our brand equity through effective marketing and prudent expansion of our distribution network, and the continued execution of our long-term operational plan to align our production facilities and sales network to best capture growth opportunities in China's evolving sportswear market.
“We believe that the continued execution of our strategy and operational plan will strengthen our competitive position over the long-term and allow us to maximize our growth opportunities in anticipation of an improving macroeconomic environment."
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