HONG KONG: 361 Degrees FY earnings plummet
- FY net earnings fall 70.1%
- Gross margin at 39.5%
- Sales slump 27.6%
361 Degrees International saw its earnings plummet in fiscal 2013 as a result of the slowing economy, weak consumer sentiment, and the threat of e-commerce to brick-and-mortar operations.
The Hong Kong sportswear maker saw earnings fall 70.1% to CNY211.3m (US$34.2m) in the 12 month period from CNY707.2m a year earlier.
Gross margin shed 0.3 percentage points to 39.5%, primarily due to two reductions in wholesale pricing to distributors during the year.
On the back of a weak order book from trade fairs held earlier in the year, the group's revenue slumped by 27.6% to close the year at CNY3.58bn.
"In a defining year under the new Chinese leadership, the sportswear industry continued to struggle throughout 2013, although there were increasing signs of a very modest recovery," the company said. "As inventories declined in the face of lower new supplies by the leading brands, retailers were able to hold discounting at a more reasonable level.
"However, with a slowing economy, store traffic remained rather weak as consumers were confronted with an ever-increasing choice of brands. E-commerce further posed an ever-increasing threat to the traditional brick-and-mortar stores in the industry, although it primarily now serves as a clearance channel."
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