【For Immediate Release】
361 Degrees International Limited
Net profit grew by 32.9% to RMB401.4 million in 1H2021
361° unlocked potential for future success with passion and
one extra degree of effort in the sports market
(17 August 2021 - Hong Kong) -361 Degrees International Limited ("361°" or the "Company", together with its subsidiaries, the "Group"; HKSE stock code: 1361), a leading sportswear brand enterprise in China, announces its unaudited interim results for the six months ended 30 June 2021.
In the first half of 2021, the Group's total revenue increased by 15.7% to RMB3,107.1 million. Sales of the Group's two core products, namely footwears and apparels, grew by 22.5% year on year to RMB1,380.5 million and 6.1% year on year to RMB1,167.7 million respectively. During the period under review, the sales of footwear products accounted for 44.4% of the Group's total revenue while apparel sales accounted for 37.6%. In addition, the revenue from 361° Kids continued an upward trend, increasing by 24.0% year on year to RMB498.2 million and accounting for approximately 16.0% of the Group's total revenue. During the period under review, the revenue from the sales of web-exclusive products at the e-commerce business increased by 54.5% year on year to RMB487.8 million, accounting for 15.7% of the Group's total revenue.
The gross profit in the first half of 2021 was RMB1,299.7 million, representing a year-on-year increase of 28.0%. Gross margin increased by 4.0 percentage points year on year to 41.8%. Profit attributable to equity shareholders increased by 32.9% year on year to RMB401.1 million, equivalent to earnings of RMB19.4 cents per share.
As at 30 June 2021, cash and cash equivalents (including bank deposits and cash in hands, and fixed deposits with original maturities not exceeding three months) amounted to RMB2,996.1 million (31 December 2020: RMB3,451.3 million). Trade and bills receivable turnover days improved from 159 days as at the end of 2020 to 146 days. Inventory turnover days dropped substantially from 111 days as at the end of 2020 to 70 days.
In view of the lingering uncertainties in the post-pandemic era, the Board has prudently resolved not to recommend interim dividend for the six months ended 30 June 2021 in order to preserve cash for the long-term financial health of the Company and bolster its ability to tide over the challenging business environment.
In the first half of 2021, pandemic prevention and control already became a normal practice in China yet there were still uncertainties such as sporadic recurrences of the epidemic. The country's economy resumed growth with steadily increasing momentum. The "internal circulation" component of the country's "dual circulation" strategy for economic development stimulated the market and unleashed the potential for growth in consumption. The sports industry also recovered steadily on the back of a good recovery in the domestic consumption. The Group adhered to the "consumer-centric" approach to business, strengthened the brand positioning that manifests "professionalism, youthfulness and internationalisation", deeply tapped into consumer needs and actively enhanced consumer experience through its omnichannel with the aim of expanding the market.
Focusing on resources with advantages to develop 361° core brand and enhancing its brand strength on multiple dimensions
Focusing its resources on the development of the 361° core brand, the Group adhered to its brand positioning that manifests "professionalism, youthfulness and internationalisation", satisfying customers' needs with its brand value and product value and maintaining stable and sustainable growth amid the fierce competition. Leveraging its tradition of actively sponsoring large-scale sports events, the Group officially became the official partner of the 19th Asian Games in Hangzhou in 2022, getting ready to shine again in 2022. The Group realised its business growth in the first half of 2021 which was driven by the Group's 361° core brand, 361° Kids and its e-commerce business.
The Group keeps on investing in research and innovation, which lay a solid foundation of for the professionalism of its products. As of 30 June 2021, the Group obtained approval for 387 patents. During the period under review, many of the Group's products won international awards. For example, the "Flying Flame" shoes became the IAAF certified carbon running shoes, 361-FIERCE, the international product line of running shoes, was rated as the "Best Deal" by Test 4 Outside, a professional review website in France; 361-STRATA 4 was rated as One of the 25 Top Picks for Running Shoes in 2021 by the United States' "Runner's World" magazine; and the "Lightspeed" suit won the German Red Dot Design Award in 2021. The remarkable results reflected the Group's efforts and perseverance in the field of professional sports.
Consumer experience fosters a sense of connection between brands and consumers. The Group always puts consumers first and upgrades the consumer experience through its omnichannel, maximizing the fulfillment of the consumers' needs. In the first half of 2021, the Group upgraded its retail stores and advanced the digital transformation of its e-commerce platform in line with the growing trend towards the integration of online and offline consumption. It also actively expanded the new retail channels by launching the proprietary WeChat mini program "361° You Yan You Du" in May which allowed the Group to tap the traffic of viewers in the private domain of online community and thus boosted growth in both the online and offline sales. The Group's customer membership expanded further as the Group succeeded in targeting its customer groups precisely and in optimizing the membership management system. The Group is committed to upgrading the consumer experience through omnichannel under which its offline physical stores, e-commerce operation and new retail channels reinforce each other.
Building up core competitiveness with the twin drivers of "professional and fashionable" sporting goods
In the first half of 2021, the Group, guided by its clear brand positioning, optimised and upgraded the portfolio of brands in its two product categories, namely the professional sporting goods and fashionable sporting goods. This resulted in the Group's steady development. In its professional sporting product category, the Group concentrated its resources on the development of three core types of sporting goods, namely those for basketball, running, and comprehensive training. The Group signed a contract with Aaron GORDON, an international basketball superstar, and Kyranbek MAKAN, a well-known Chinese professional basketball player, to engage them as its brand spokespersons. In addition, the Group also signed a contract with LI Zicheng, the Asia and China marathon double champions and various elite runners to promote its products, and sponsored a number of national teams and professional sporting teams as well as the international large-scale sports events including the 19th Asian Games in Hangzhou in 2022 so as to strengthen the Group's image as a brand of functional products for sports.
As to its fashionable sporting product category, the Group leveraged its rich experience in operating co-branded intellectual property ("IP") products. It continued to launch a number of co-branded products such as The Three-Body Problem, Saint Seiya, Gundam, Initial D, Minions and Captain Tsubasa, which had been widely recognised within the industry and among consumers. In June 2021, the Group officially signed a contract with GONG Jun, a well-known young actor in China who matched nicely its brand image, to engage him as the global endorser of the Group's products. This has accentuated such characteristics as trendiness and youthfulness of the Group's products and enhanced its brand image.
The Group has made a significant contribution to the development of the growing trend of China-Chic culture. On 24 April 2021, 361º officially entered into a strategic cooperation agreement with the China Cotton Industry Alliance (CCIA) in Urumqi, Xinjiang, to promote the concept of "Producing Quality Chinese Products with Quality Chinese Cotton" and provide products made of high-quality Chinese cotton for consumers. The move can enhance the influence of the Chinese brands of cotton. At the signing ceremony, the Group successfully launched a campaign for promoting new products manufactured with Chinese cotton under the theme of "Love for Xinjiang". During such campaign, a series of new Chinese cotton products that feature the China-Chic trend and local cultural characteristics were introduced to the market and they received overwhelming responses.
Enhancing competitive advantages that differentiate 361° Kids and strengthening the Group's leading position in the kids' wear industry
The Group vigorously expanded its product lines and developed finer market segments by enriching the sub-categories of products and constantly enriched its product portfolio to meet the children and teenagers' diverse needs. Its current product categories have covered various occasions and purposes such as those of running, football, basketball, outdoor activities and campus life, etc. The Group comprehensively cooperated with such superior resources as the most prestigious football clubs and football schools in China to keep enhancing the Group's advantages that differentiate the 361º Kids brand from the peers' brands and to consolidate and strengthen the Group's leading position in the domestic kids' wear industry.
361º Kids leveraged the positioning of its products as "technology-driven, new China-Chic products". Therefore, it constantly enhanced the health technology to be adopted in its products. It has successively launched innovative technologies such as dryness and FUNFOAM technology, and cooperated with China State Shipbuilding Corporation to apply the "Zinc" anti-microorganism Technology in the production of kids' wear. Meanwhile, childlike interest and kids' fashion were also integrated into the design of the products of 361º Kids. For example, 361º Kids cooperated with the owner of the "China Aerospace * Space Imagination" IP and launched a series of products that featured a sense of future and manifested the power of science and technology, which earned acclaims from the market. During the period under review, 361º Kids and the 18th Jinjiang Gymnasiade jointly launched the "Youth Sports Promotion Plan", and became the title sponsor of the track and field events of the Gymnasiade.
Upgrading the brands online through precision marketing
In the post-pandemic era, the inexorable trend towards the transformation of online sales channels is gathering momentum. Ever oriented to customers' needs, the Group has adopted appropriate positioning on the e-commerce platforms and carries out the upgrading of its brands online by leveraging the product upgrade, digital transformation and operational efficiency enhancement. As a result, e-commerce has become an efficient operation for boosting sales and enhancing brand image. In the light of the differences between online and offline customer bases, the Group made use of big data to conduct product planning with precision. This, coupled with multi-dimensional sales and marketing, led to rapid growth in online sales. For example, hot sellers such as Aaron GORDON autographed basketball shoes Zen 3 and AG1 series sold out in seconds after their online launch. The products which were marketed with a young actor GONG Jun as the endorser also became bestsellers.
Since 2021, the Group has been upgrading its classic products for international markets and has taken the lead in launching them on domestic e-commerce platforms. Such products have been well received by young consumers, consumers in first- and second-tier cities, affluent consumers and consumers with a large average ticket size. During the period under review, the Group launched Spire-R and Spire-S, both of which are highly sought after by consumers. The Group's research and development team collaborated with LI Zicheng, the Asia and China marathon champion, in developing the "Flying Flame" professional marathon running carbon shoes, which, once launched, triggered panic-buying on the e-commerce platforms.
Mr. Ding Wuhao, President of 361˚ Group said, "Looking ahead to the second half of this year, the sports industry is expected to maintain momentum of steady growth and enter into a stage of high-quality development. As a leading sportswear brand enterprise in China, 361º will continue to uphold the brand concept of 'One Extra Degree of Passion' and reinforce its positioning as a 'specialised, youthful and internationalised' brand. We will endeavor to continuously enhance the brand value and product value, better serve consumers, and strive to bring good returns to the shareholders."
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About 361 Degrees International Limited
Established in 2003, 361° is a leading sportswear enterprise in China. The Group is an integrated sporting goods company which principally engages in brand management, research and development, design, manufacturing and distribution. Its comprehensive product portfolio comprises footwear, apparel, accessories under the 361° Core brand and 361° kids brand. Upholding the brand concept of "One Extra Degree of Passion" （多一度熱愛）, 361° continues to strengthen its positioning as a specialised, youthful and internationalised brand, striving to provide the professional sportswear products to sports lovers.
The Group operates a distributorship business model through the first-tier, exclusive distributors and second-tier, authorised retailers to manage an extensive distribution network of over 7,000 retail stores across China and the world. It has established a leading position in third-tier and lower-tier cities in China.
For more details, please refer to its website: www.361sport.com
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17/08/2021 Dissemination of a Marketing Press Release, transmitted by EQS Group.