Xtep’s multi-brand strategy is initially showing results. Benefiting from a series of sports brands acquired last year, Xtep’s revenue bucked the trend and increased by 10% to 3.679 billion yuan in the first half of this year. It is reported that among China’s leading sports brands, Anta has also adopted a multi-brand strategy to build its sports brand Fila into a “performance growth engine.” So whether Xtep, which also adopts a multi-brand strategy, has the ability to become the third Two “Anta” will incubate their brands into the next “Fila”?
Xtep store
Regarding the reasons for the revenue growth, Xtep said that although Xtep’s main brand revenue has declined slightly due to the epidemic, newly acquired sports brands such as K-Swiss and Palladium have brought revenue growth.
It is reported that in March last year, Xtep cooperated with the American shoe brand Wolverine to establish a joint venture to operate Wolverine’s outdoor brands Merrell and Wolverine. The Chinese market business of high-end running shoe brand Saucony; in May last year, Xtep acquired K-Swiss and Paladin, a subsidiary of South Korean fashion retail group E-Land Group, for US$260 million (approximately RMB 1.642 billion), as well as Supra and other sports brands.
Xtep’s brand Paladin
Although these newly added brands have brought a certain amount of business to Xtep However, higher operating costs also eat into Xtep’s profits. According to Xtep’s announcement, new brand expenses increased by approximately 93.2 million yuan, and research and development expenses were approximately 100 million yuan; Xtep’s net profit in the first half of this year fell 47% year-on-year to 248 million yuan. But Xtep remains optimistic. It is reported that in order to meet the continued growth in demand for functional sporting goods, more Saucony and Melo stores will open in the second half of this year.
Clothing industry expert Liu Liang told reporters that due to the epidemic, sports events were suspended in the first half of this year, and the marketing of running events such as marathons has always been Xtep’s main marketing method. As a result, Xtep’s marketing has been greatly affected. In addition, the development of multiple brands takes time. The newly added brands of Xtep are still in their infancy in the Chinese market, so it is understandable that they do not have a large market share. Liu Liang believes that the competition among sports brands will become more intense in the second half of this year, and Xtep needs to continue to work hard to find new profit growth points, incubate the next “Fila”, and inject fresh blood into the group. Under the “encirclement and suppression” of many competitors, can Xtep use its multi-brand strategy to bring new breakthroughs and become the second “Anta”? </p
