• FY profit down 60.1% to CNY310.6m
  • Turnover slumped 37.5% to CNY2.90bn
  • Company hit by weaker demand and rising costs 

Branded sportswear company Peak Sport Products has blamed weaker demand, rising costs and falling sales for a decline in full-year profit - but stressed strategies are in place to improve its competitiveness going forward. 

Profit plummeted 60.1% to CNY310.6m (US$49.9m) for the year ended 31 December, the Hong-Kong based company said.

Turnover slumped 37.5% to CNY2.90bn from CNY4.65bn the year before, due to to destocking in the sportswear industry and weaker demand for sports products.

Gross margin slipped 2.9% points year-on-year to 36.5% because of rising production costs and increases in subsidies and rebates given to distributors.

Efforts to boost the distribution network saw the addition of nine distributors to its portfolio to 59, but the number of stores in the company's portfolio was cut by 1,323 to 6,483.

Looking forward, Peak Sports plans to restructure its retail network by closing small and less-efficient retail stores and opening larger ones through its distributors and retail store operators. It also intends to invest CNY150m in expanding production facilities.

"We remain optimistic about the future of the sportswear industry in China, despite all of the headwinds," noted CEO and executive director Xu Zhihua.

"I believe the sportswear industry will benefit from an increase in per capita spending on sports products as a result of the acceleration of urbanisation in China and from the potential demand in global markets.

"After years of careful development of both our business and our brand, we have become not only a pioneer in the industry in China, but also a leading proponent of expanding the Chinese sportswear industry around the world."