Title: Xtep Faces Competitiveness in the Running Shoe Market, Revenue Target Challenged
Subtitle: Industry Experts Question Longevity of Xtep’s Running Shoe Strategy
Date: [Insert Date]
In a recent statement, Ding Shuibo, the chairman and CEO of Xtep Group, emphasized the importance of wearing Xtep running shoes, comparing it to a heroic act. Despite his confidence in the company’s running shoes, Xtep’s ambition to achieve a revenue target of 24 billion yuan by 2025 may face significant challenges amid fierce competition.
Xtep recently unveiled its new generation of champion running shoes, the 160X5.0 and 160X5.0pro, priced at 999 yuan and 1,299 yuan, respectively. While Xtep has achieved relatively optimistic sales in the past, with projections of selling 1 million pairs of racing shoes in 2022, the 1,000-yuan price range may pose a barrier for some consumers.
Ding Shuibo has attributed the success of Xtep’s running shoe line to its long-term approach and focus on differentiation. Xtep began venturing into the marathon project back in 2007, making it one of the earliest brands in the road running field. The company has continued to expand its running shoe offerings, partnering with champion athletes to appear at major marathon events.
Financial reports indicate that Xtep’s revenue is set to increase by -0.13%, 22.53%, and 29.13% from 2020 to 2022, respectively. Despite this growth, concerns have been raised about the sharp decrease in net profit growth expected in 2022, at only 1.47%. Experts speculate that Xtep’s focus on the running shoe market may have reached its peak.
Although Xtep has managed to break out of the second-tier sports brand circle, positioned in third place behind Anta and Li Ning, its revenue and market value still fall short. While Anta’s revenue has surpassed 50 billion yuan and Li Ning has exceeded 25 billion yuan, Xtep’s revenue stands at 10 billion yuan, with a market value just over 20 billion yuan.
The market for running shoes is substantial, with projections indicating the potential for a market size worth hundreds of billions of yuan. However, Xtep is not positioned for a monopolistic role in this market. Established brands such as Nike and Adidas continue to dominate the field, boasting technological advancements such as FlyKnit uppers and STRUNG technology.
Furthermore, domestic brands like Anta and Li Ning are making significant investments in the running shoe market. Li Ning has been focusing on its position as a fashionable international brand, emphasizing sports technology innovation and prioritizing key categories such as basketball, running, fitness, badminton, and sports life. Anta, on the other hand, is set to release a new line of marathon racing carbon plate running shoes in 2023, targeting elite runners and professional athletes.
While Xtep has achieved success in the running shoe market, experts caution that the company faces strong competition, limiting its market share and brand loyalty. To diversify its offerings and reduce dependency on the running shoe market, Xtep may need to explore other sports fields, enter the leisure market, or launch new product lines.
In 2019, Xtep initiated diversified development, signing joint ventures and acquiring international brands to expand its influence. However, current financial data reveals that revenue from Xtep’s main brand still accounts for 86% of its total revenue, indicating limited contributions from other brands.
In comparison, Anta and Li Ning have already embarked on diversified strategies, experiencing success with brands like Fila and Arc’teryx for Anta, and China Li Ning and Li Ning young for Li Ning.
While Xtep has undoubtedly achieved growth in the running shoe market, the longevity of its “running shoe bonus” remains uncertain amidst intensifying competition and the need for diversification. Only time will tell if Xtep can sustain its current success and achieve its ambitious revenue target.