Yang Mr. Lu Bin gave everyone a review of the 2017 annual performance and gave detailed answers to questions from the financial community and media. The following is a summary of the main issues that everyone is more concerned about.
Accounts Receivable Improvement
In the first half of 2017, in order to promote and accelerate the flattening of sales channels, we proactively granted our general agents longer accounting periods. The substantial increase in the number of general agent-operated stores puts some short-term cash flow pressure on it. The group's abundant cash can provide strong support to the general agent. In the second half of 2017, flattening is coming to an end, the general agent's revenue has increased, and the group does not need to provide it with much additional support. Therefore, our average accounts receivable has returned to 130 days, so the turnover days of accounts receivable are higher than in the mid-term. The decline is obvious.
Inventory increases and provisions
Compared with the same period last year, inventories increased by 258.3 million to 717.9 million. The increase was mainly due to a 55% increase in finished products. Due to the relatively cold winter in December 2017, the Group received additional purchase orders from its exclusive general agents and franchisees in late 2017 and therefore increased inventory to meet these demands. All these finished products have been shipped to customers in January 2018, so there is no provision risk.
Inventory provisions mainly come from e-commerce, because e-commerce is directly operated and needs to prepare goods for sales. However, as the O2O business becomes more mature, the proportion of goods that e-commerce companies need to prepare relative to sales will become smaller and smaller, and the main products that are prepared are only for e-commerce exclusive contributions.
Children business
The children's business underwent restructuring in the second half of 2016 and was merged into the adult business. In 2017, overall management was achieved, laying a solid foundation for future development. Children's business now only accounts for a small part of the company's business. We are optimistic about the business prospects, but will develop it with a prudent attitude, based on the premise of optimizing the interests of shareholders. The number of children's sales points at the end of 2017 was 250. We plan to increase the number of sales points by a net of 150 to 400 in 2018. We are confident that the children's business will improve in 2018 and develop in 2019.
Outlook for 2018
After completing the transformation in the past three years, we expect to open 300 net stores in 2018, and these 300 stores will be more efficient. At the same time, we will also open 10 flagship experience centers directly owned by XTEP to showcase a new professional sports image and directly connect with consumers. We also see a trend. The same-store growth rate of stores that have been open for more than one year has risen from low single-digit growth at the beginning of 2017 to high orders in 17Q4. This trend continued in January and February of 2018, and in 2018 The same-store growth rate from January to February this year was higher than Q4 2017. The specific same-store growth data for 18Q1 will be released in early April 2018.
