Analysts at Bank of China International have released a report indicating that XTEP INT'L (01368) posted weaker-than-expected operational data for the second quarter. The core XTEP brand recorded a mid-single-digit year-on-year decline, while the Saucony brand saw a low single-digit year-on-year increase, both falling short of the bank's projections.
In response to the soft second-quarter retail sales and the impact of de-leveraging in physical retail operations, Bank of China International has lowered its earnings per share forecasts for XTEP for the years 2026 to 2028 by 2% to 3%. Consequently, the bank has reduced its target price for the stock from HK$5.00 to HK$4.30, while maintaining a "Buy" rating.
The report suggests that achieving its full-year revenue target has become more challenging for XTEP in the current macroeconomic climate. It is anticipated that management may provide a more conservative revenue outlook when the interim results are released in August. However, the guidance for net profit margin is likely to remain in the high single-digit range, which should help limit near-term downside risks to earnings.
The analysts also noted that if weather conditions become more favorable, XTEP's strategy of focusing on running products could potentially drive growth in the second half of the year.
Comments