01 Nov 2022

Xtep reported its 3Q22 operational data with retail sales grew by 20-25% YoY. July/August saw robust growth of ~25%/~30% YoY, but Sept growth slowed down to low-teens YoY due to the negative impact from the pandemic situation in Mainland China. Kids segment recorded a robust growth of ~50% YoY in 3Q22, on the back of i) strong associated sales with adult wear as adult & kids wear highly matched; ii) recovering demand from sports classes in schools. Online sales saw a continual strong growth of ~30% YoY during this quarter. Mgmt turned to more cautious on 4Q22 sales, as Golden Week sales growth was similar to Sept at low to mid-teens only, since ~20% of its stores were shut down due to the pandemic, together with the potential increase in retail discount in order to further clear inventories.

CROSBY Research – Xtep (1368 HK/BUY): Retail growth slowdown in Sept