Peak's net profit drops 60 percent

Hong Kong-listed sportswear maker Peak Sports Products Co said its net profit declined 60.1 percent to 310.6 million yuan ($49.83 million) in 2012.

Its net profit margin was at 10.7 percent in 2012, down from 16.7 percent the previous year. The Fujian-based Peak has reported the biggest net profit decrease among domestic sportswear companies in 2012.

Its gross profit declined 42.2 percent to 1,058 million yuan last year. The company said the sharp decrease in gross profit was a result of the increase in the cost of production and in the amount of the various rebates it had to pay to support distributors.

The company also saw a decrease in selling and distribution expenses and a decrease in income tax, however, those items only partially offset the impact of the gross profit decline.

Most sportswear manufacturers were plagued by inventory problems in 2012 due to weak global demand. Peak's average inventory turnover days reached 80, up from 49 days in 2011. However, the company's inventory went down from 421 million yuan to 386 million yuan in 2012.

To optimize distribution channels, Peak closed smaller and less efficient retail outlets, while opening larger outlets in 2012. Peak operated 6,483 authorized stores at the end of 2012, down from 7,806 stores in 2011.

Most sportswear makers in China reported slower growth in 2012. Hong Kong-listed sports products maker 361 saw its net profit declining by 37.6 percent in 2012.