361 Degrees sees fast recovery in China

Chinese sports brand 361 Degrees says its sales and gross margin improved in the first half year to June 30.

361 Degrees, listed in Hong Kong, operates 7404 retail stores across Mainland China. It says store productivity continued to be a central theme in future profitability.

“The current store count of outlets is not likely to increase substantially in the foreseeable future as the retail landscape is fast changing with a new generation of consumers adopting different buying habits,” the company said in its half year statement.

“The group is very much attuned to these developments and has intensified efforts to promote various initiatives in internet and mobile sales. However, the days for the traditional bricks and mortar store are far from over and particularly in our case, where over 70 per cent of our outlets are in the tier-3 and smaller cities, strong local connections with schools and sports clubs are an inherent advantage, especially as increasing numbers turn to sport as a form of recreation and lifestyle.”

The group reported its turnover improved by 5.7 per cent year on year, and by 22 per cent over the preceding six months, to register RMB2.2 billion. Gross margin gained a further 1.6 percentage points to 41.3 per cent on the back of lower material costs.

Operating profit reached RMB485.5 million – 34.4 per cent higher than in 2014.

Ding Wuhao, president and executive director, said 2015 promises to be “a very good year for the group” as the sportswear industry experiences a steady recovery and the 361 Degrees brand gains further acceptance in the market place.

Footwear turnover rose 16 per cent as a new portfolio of performance products gained a positive reception from retailers. Apparel turnover fell 3.5 per cent because of a higher comparative base, which was boosted by late deliveries in the fourth quarter of 2013. 361° Kids continued to show growth momentum as it differentiated itself from the regional brands.