PEAK Shoes Industry Slowdown &Nbsp; 2 Billion 600 Million Yuan Cash In Winter

PEAK sports (01968.HK), which has been growing by two digits, has finally decided to slow down.

On the afternoon of October 14th, PEAK sports CEO Xu Zhihua said in an interview with reporters, "in the face of tight money and slowing economic growth, PEAK decided to reduce the quantity of futures orders and try to achieve zero inventory at the end."

In October 10th, PEAK just announced the results of the second quarter order meeting in 2012. The sum of orders increased by 9.5% compared with the same quarter in 2011. Meanwhile, the same store sales in the third quarter increased by only 6.2% compared with the same period last year. Compared with the previous two digit growth rate, PEAK slowed down for the first time.

Xu Zhihua said: "in the second quarter of 2012, how many products do we sell under the distributor?" PEAK will lower its forecast next year, and the order growth rate that will normally stay above 20% will drop below 15%, and sales will also be expected to grow in a single digit range.

PEAK's interim results in 2011 showed that turnover and gross profit increased by 24.7% and 32% respectively compared with the same period last year. PEAK, which holds 2 billion 600 million cash flow, was also widely criticized and caused the stock price to fall. It was questioned by the Hongkong shareholders that there was no bonus. At that time, PEAK chairman Xu Jingnan said "to be a cash cow".

"Too many uncertainties, inflation and international political instability all make us feel that there is enough cash to enable companies to respond promptly and effectively to sudden changes in the market." Xu Jingnan thinks. Xu Zhihua also thinks that the decision of cash cow is right. "We will also slow down the pace of investment."

While reducing futures orders, three production bases, which cost nearly 1 billion 100 million, will also slow down, including two planned production bases in Huian, Fujian and 80 million in Jiangxi, and 1 billion yuan production base in Shandong Heze.

Meanwhile, the number of PEAK stores will increase sharply in 2012. According to the data provided by the company, 700 stores will be opened next year, but some stores will be closed at the same time. The number will be around 500.

"We have begun to coordinate with the distributors, and the branches with low efficiency will be closed. All regions are involved. " Xu Zhihua said. "On the basis of the two or three tier cities, we will focus on expanding the first tier cities, and next year we will focus on expanding the Shanghai market.

PEAK believes that when the economic situation is uncertain, the industry will slow down, reduce the order production and reduce the profit. Although stores may not be good at figures, they will ensure growth in performance and provide investors with returns.