The sportswear retail sector in China is being buffeted by falling sales, shrinking profits and store culling programs – both local and multinationals.

But one Chinese player is bucking the trend: China Dongxiang, which runs Kappa-branded stores, has reported a net profit growth of 73.5 per cent for the year to December 31.

CEO Chen Yihong says the recession has seen retail sales decline.

“Nevertheless, amidst all the challenges, we enhanced our operational efficiency by reasonably utilising our available resources during the year.”

The company cleared inventories totaling 1.3 billion yuan through of e-commerce, factory outlets and distribution channel.

It continued to adopt “smart marketing”, including the use of social media networks, an online drama series, micro-movies and talk-of-the-town topics, infusing the Kappa brand into consumers’ daily lives.

As at December 31, the company had a total of 2009 Kappa retail stores operated directly or indirectly by 33 distributors in the China segment.

Looking forward, the company says it will continue to deepen the “brand + retail” operating philosophy to improve the reach of its retail outlets, and continue to optimise the supply chain.

“The sportswear sector is faced with a challenging situation in the macro economy and operating environment, which is unlikely to turn around for the better in the near future. Nevertheless, leveraging on the experience and enthusiasm of China Dongxiang in the Chinese sportswear industry, the group’s strong financial position and clear vision and strategies, the group shall seize opportunities arising from the recovery of the industry,” said Yihong.