Xtep Says Sales May Expand 20% This Year on New Sportswear Stores in China

Xtep International Holdings Ltd., a Chinese sportswear maker part-owned by the Carlyle Group, said sales this year may grow about 20 percent as it expands its retail network in China’s smaller cities.

“We are very comfortable with this growth and looking forward, we hope we can do better than this number in 2011,” Xtep Chief Financial Officer Terry Ho said in an interview in Hong Kong today. The company’s sales gained 24 percent in 2009 from a year earlier to 3.54 billion yuan ($519 million). Profit rose 27 percent to 647.5 million yuan.

Hong Kong-listed Xtep, which provides jerseys and sports products to English Premier League football club Birmingham City, is benefitting from increased consumer demand for casual shoes and clothing in China, where retail sales rose 18 percent in March from a year earlier.

Xtep’s stock has risen 36.4 percent this year, compared with a 4.2 percent decline in Hong Kong’s benchmark Hang Seng Index. The shares fell 2.1 percent to HK$5.96 at close of trading.

The company may open as many as 1,000 stores in 2010, taking its total to about 7,000, Ho said. Xtep may spend 12 percent of sales this year on branding, he said.

“It’s fair to say we can perform a 20 percent increase” in sales this year compared with 2009, Ho said.

To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net

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