Xtep International Holdings, one of the three Fujian shoemakers listed on the Hong Kong exchange, is taking another step to assemble a high-end portfolio of global brands to broaden its product range, following its US$260 million takeover of E-Land Footwear USA Holdings.
The company, based in Quanzhou city, bought 100 per cent of E-Land Footwear - the owner of such brands as K-Swiss, Palladium, Supra, PLDM and KR3W - as part of its strategy to build a multi-brand portfolio. Earlier in March, Xtep formed a venture with Wolverine Worldwide to sell Merrell hiking gear and Saucony running shoes in mainland China.
The E-Land takeover not only allows Xtep to own the brands and their worldwide outlets outright, it also helps the Chinese company enter new markets with shoes, clothes and apparel items for different lifestyles and urban subculture around the world.
High-end brands are “what people in China want, with their new wealth,” Xtep’s founder and chief executive Ding Shui Po said. “It is the DNA, the skill” found in E-Land’s brand portfolio that makes the acquisition a good move, he added, describing his acquisitions as “just as high end” as Nike’s products.
Xtep, which is capitalised at about a quarter the size of its Fujian peer Anta Sports Products, is not the only company to be assembling a portfolio of global brands.
Anta, based in Jinjiang city, last month completed the takeover of 98 per cent of Amer Sports Products, the Finnish company that owns a range of sports brands from Wilson tennis rackets to Salomon snowboards and Atomic skis.
Xtep, founded in 1990, started off as a producer of running shoes, later on branching out into performance apparels and lifestyle clothing. With its Wolverine venture, Xtep is getting into China’s fast-growing market for outdoor gear and long-distance running, where as many as 1,581 certified marathons were held last year all over the country, according to data by the sports ministry.
The product portfolio bought from E-Land helps Xtep sell to new customers: K-Swiss makes a range of performance gear for sports from tennis to triathlon, while Palladium makes urban boots, Supra makes lifestyle sneakers, PLDM makes sandals and KR3W is a California brand much loved by skateboarders. The five brands are sold in 80 countries and territories around the world, Xtep said.
In the immediater term, Xtep’s products will be sold separately from the brands that it has acquired. Exports of the namesake brand will focus on emerging markets such as Vietnam, India and Thailand, where Xtep will open between 15 and 20 new outlets this year.
Though this is Xtep’s first venture selling any types of products outside China, “everything has to have a first step,” said the Fujian company’s chief financial officer Ricky Yeung at a press event in Hong Kong. “Xtep will always target the mass market.”
The all-cash deal, which is expected to close in July, has not been a “cheap price, but it’s a reasonable price,” said the chief financial officer Yeung.
Xtep’s shares jumped 8.6 per cent on Friday after announcing its takeover, but fell 5 per cent amid a slumping market on Monday to HK$4.81 in Hong Kong. The stock has risen 13 per cent this year.
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