Mr. Ding Shuibo, Chairman and Chief Executive Officer of the Group (left), and Mr. Yang Lubin, Chief Financial Officer (right) presided over the meeting. At the meeting, Mr. Ding Shuibo, Chairman and Chief Executive Officer of the Group, and Mr. Yang Lubin, Chief Financial Officer, presented to everyone the 2018 mid-term Performance review, 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 improved
As a result of the profitability improvement of our sole distributors, for whom we removed voluntary support. The average turnover days of trade receivables decreased from 164 days on June 30, 2017 to 130 days on December 31, 2017, to 113 days on June 30, 2018, which was lower than 120 days with the exclusive general agent. contract period. The Group reversed RMB 22.8 million of provisions for trade receivables made in the past.
Inventory increased, and sales growth in the second half of
The year was compared with the same period last year. Inventory increased by 310 million to 1.03 billion, mainly because the products in Q1 and Q2 of 2018 were very popular, the terminal sell-out rate was very high, and the confidence of the exclusive general agent was very high, so A lot of supplementary orders for 18Q3 have been added, and these orders have been sent to the general agent in July 2018 and will be converted into group revenue in the second half of 2018, so there is no provision risk. Because of the increase in replenishment orders, we expect the sales growth rate in the second half of 2018 to be higher than that in the first half of 2018.
Inventory provisions, more than 200 million of the e-commerce direct-operated
Inventory belongs to the e-commerce company. The e-commerce company is directly operated, and its sales exceeded 1 billion last year. The inventory of more than 200 million yuan is compared to the e-commerce sales this year. It is very healthy, and the provision of more than 20 million yuan for e-commerce inventory of more than 200 million yuan is also very normal. There was no provision for the same period last year because e-commerce only started to make special contributions to e-commerce in 2016. Since then, the scale of e-commerce has become larger and larger. It is not that there was no provision for the same period last year, but the amount was only a few million and was not listed separately. We also expect that the amount of inventory provisions will only remain at this level in the future. Because we will continue to go in the direction of O2O, we do not need to prepare inventory for O2O, so the inventory risk is not high.
The gross profit margin is stable.
Spurred by the cold winter at the end of 2017 and early 2018, the increase in replenishment orders exceeded the original plan. Therefore, there is a slight adverse impact on the gross profit margin of apparel products, but some are highly recognized by consumers for functional footwear products. This was offset by the increase in gross profit margin of footwear products. The overall gross profit margin remained stable at 43% to 44%.
Retail performance:
Retail performance from July to August was good, with same-store sales growth rates similar to those in the first half of the year.
Future Outlook
In order to cater to China's consumption upgrade and the diversified needs of consumers, we will adopt a multi-brand strategy and seek cooperation with other brands that are complementary to our core Xtep brand to expand the group's corresponding consumer groups and product range. First of all, the Group will regard international sporting goods brands as cooperation targets to expand its position in the Greater China region. We believe that Greater China is still one of the fastest-growing markets in the world. The current per capita spending on sporting goods in this region is relatively low, so the market penetration potential is huge. We will still adopt a prudent attitude in selecting targets. In view of the group's abundant net cash, we will not raise funds to purchase.
