Nancy Fei

China’s sports equipment maker Xtep (1368) said its core brand recorded high single-digit retail sales growth in the first quarter from around 20 percent growth a year ago.

Last year’s high growth rate coincided with the ease of Covid restrictions in China, but the single-digit growth this year was partly challenged by weak consumption: total retail sales of consumer goods in China fell short of expectations in March, rising by only 3.1 percent yearly.

Another Chinese sports equipment brand Anta Sports (2020) was similarly affected and achieved only mid single-digit growth in retail sales for the three months.

Both brands saw an increase in their stock prices yesterday. Anta rose 4.11 percent to HK$84.95, reaching its highest stock price since last Friday.

Xtep jumped 2.06 percent yesterday to HK$4.46, marking the highest growth since April 14 when the company got caught in negative publicity in mainland China.

People questioned whether Xtep, as one of the sponsors of the Beijing Half Marathon on the day, manipulated the race’s results. Consequently, Xtep’s stock price plummeted 5.47 percent on April 15.

The retail discount levels of Xtep was between 25 and 30 percent for the three months, and channel inventory turnover was four to four-and-a-half months. However, the figure for channel inventory turnover was less than 80 days over the years 2019 to 2021, indicating that under the current economic downturn and weak consumption, Xtep is facing significant inventory pressure.