An Xtep store in Nanjing. (Photo/CFP)
Xtep International Holdings, one of China's leading fashion sportswear companies, announced the closure of nearly 100 shops last year, adding to a total of more than 3,000 store closures in the sporting goods industry in 2012, the Shanghai-based National Business Daily has reported, predicting that the trend will continue this year.
Xtep was the last among China's six leading sports brands to take steps to close stores, following similar moves by its counterparts such as Li-Ning, Peak Sport and ANTA Sports, the report said. Xtep CFO Terry Ho said the company plans to shut down an additional 100 to 200 stores this year.
"Previously these sports brands in a bid for a higher price-earnings ratio rushed to open shops. Closing stores is an inevitable result as they have all been kidnapped by the capital market," the daily cited an unnamed investment bank executive as saying.
"The blind expansion by most sports brands is a consequence pushed by the capital market. Now shop closures are a bid for survival," said Adam Chang, CEO of Key-Solution Sports Consulting Company. "The whole industry will face a severe reshuffle and we'll see which brands can persist in their restructuring."
Xtep is expected to see 15%-20% fewer orders in the first half of this year, and may see the trend to continue in the second half, Ho said. Xtep will continue to sell off its inventory by offering discounts, and will close shops reporting losses, he said.
All the major sports brands have taken turns to shut down their retail stores, in a bid to restructure their sales channels and digest inventories, the report said.
Li-Ning Company, one of China's top-tier sports brands, closed nearly 1,000 shops in the first half of last year, reducing its total stores to 7,303, the report said, citing the company's financial report. More shop closures are expected to be revealed in its upcoming 2012 annual report, the daily said.
Peak Sport Products closed nearly 1,300 shops last year, the report said, citing its own calculations. ANTA Sports Products closed at least 110 shops.