Last year was tough for Chinese sportswear company Peak Sport: net profit fell 60.1 per cent.
The company’s turnover totalled 2.9 billion yuan, a 37.5 per cent fall. The decline in turnover was attributed to destocking in the sportswear industry and a decrease in the demand for sports products caused by weak economy throughout the year.
Against a background of fragility in the domestic and international economies and intense competition that affected demand for sports products in 2012, the company focused on adjusting and optimising its distribution network. It increased the number of distributors to 59 from 50 last year. The rise was mainly the result of strengthened marketing management.
Peak Sport says it will continue to optimise its distribution network in order to prepare for the continued growth of the sportswear industry. It intends to further restructure its retail network by closing small and less-efficient retail outlets and opening larger ones through its distributors and retail outlet operators.
In addition, the company will encourage each of its retail outlet operators to open more retail outlets in order to help them to withstand market risk.
In terms of distributors, it says it intends to increase the number of distributors and encourage them to set up more self-owned retail outlets in order to help enhance competitiveness, collect market information and improve their ability to cope with market changes.
In the coming year, Peak intends to invest 150 million yuan on expanding its production facilities. It believes that by expanding its own production capacity, it will be able to gain better control over its manufacturing process and greater bargaining power against contract manufacturers.
“We remain optimistic about the future of the sportswear industry in China despite all of the headwinds,” said CEO Xu Zhihua.
“We have confidence that we can further enhance the competitiveness of our brand and promote the spirit of our company both domestically and overseas,” he said.
Peak Sport has 6483 retails outlets in China.
