For the year ended 31st December 2013, turnover of footwear company 361 Degrees International Limited reached 419.4 million euros, a decrease of 27.6% from 579.3 million euros in 2012. The group attributes this performance to its inventory clearance’ strategy with aggressive discounts at the retail channel affecting the distributors’ demand for new products. During the year under review, the turnover of their business segments of footwear, apparel and accessories decreased by 31.2%, 30.9% and 25.3%, respectively. Average selling price of the footwear products decreased by 11.9% to 10.97 euros, while apparel’s fell by 14.5% to 7.95 euros, and accessories’ by 14.4%. The sales volume of footwear and apparel recorded a decrease by 22.0%, and 19.2% to 16.2 million pairs and 23.2 million pieces, respectively.

Profit after tax, attributable to equity shareholders, fell to 24.7 million euros, down 70.1% from the 82.7 million euros registered in 2012, and carrying on with the declining trend initiated in 2012 when profit was -37.6% down 2011 levels (132.6 million euros).

Gross margin was down 0.3 percentage points, from 39.8 in 2012 to 39.5 in 2013.

Earnings per share amounted to 0.01 euros, lower than the 0.04 euros in the previous year, and the 0.06 euros registered in 2011. In view of these results the Board has decided not to recommend a final dividend. 361 Degrees International Limited shares were last traded at 0.17 euros at the Hong Kong Exchanges and Clearing Limited (HKEx), on the 14th of May.

The company continued its exclusive distributorship business model: they don't own any of the outlets; they are owned and managed by authorized dealers. 361 Degrees International claim this model is the source of such benefits as economies of scale, more cost-effective marketing and promotion campaigns and better inventory control. As at 31 December 2013, the number of exclusive distributors was 31, and they oversaw themselves 3 299 authorized retailers, who in turn owned and managed a total of 7 299 retail outlets in China. The majority of stores were located in northern China (2 834 stores representing 38.8%) (includes Beijing) and Eastern China (1 821 stores corresponding to 25.0%). Remaining stores are located in the West (20.4%) and in the South (15.8%).

The group declared they continued to leverage the online sales channel by selling apparel, footwear and accessories through an independent third party on popular online retail platforms such as taobao.com, tmall.com and 360buy.com. The group also set up a branch office in Taiwan to facilitate the operation of its overseas business, targeting markets including the USA, South America, Southeast Asia and Europe.

As at 31st December 2013 the group had 100 and 167 research and development (R&D) staff for footwear and apparel, accessories and children’s wear, respectively. The group’s R&D spending accounted for about 2.4% of its turnover in 2013, compared to 1.7% registered in the previous year. As at the end of the year, the group owned 23 footwear production lines (Wuli Industrial Park and Jiangtou), providing a combined annual production capacity of approximately 21 million pairs of footwear.

Established in 2003 and listed at the Hong Kong Exchanges and Clearing Limited (HKEx) since June 2009, 361 Degrees is a Hong Kong based sportswear brand company, vertically integrated from design, research and development, manufacturing to brand management. Its products include footwear, apparel, accessories and equipment for sport and leisure activities. 361 Degrees International Limited has established an extensive supply chain management system, through proprietary and sub-contracted manufacturing operations and an exclusive distribution and retail network in China through distribution via authorized distributors.