According to the fifth five-year plan released by Xtep in September 2021, the revenue of new brands, including K·SWISS, is expected to reach CNY4 billion in 2025
K·SWISS, an established American fashion brand owned by Chinese sportswear giant Xtep (01368: HK, 特步), has been taking bold steps to enhance its product and brand visibility.
In January, K·SWISS, which was founded in 1966 in California, opened its first brick-and-mortar store in Harbin, capital of northeastern China’s Heilongjiang Province.
Media also reported that K·SWISS recently also had joined hands with the well-known boutique store Leaders 1354 in Chicago to release new series of products under a co-branding campaign.
Market watchers believe that a slew of commercial activities by K·SWISS reflect the brand’s urgent need to expand its influence and hit higher growth targets. And its plan to do so hinges partly on tapping the resources of its parent Xtep and other brands.
K·SWISS has decided to launch products such as its retro-style Classic 66 and SI-18 shoes, hoodies and jackets in partnership with Leaders 1354 stores in Chicago, a brand that dates back 20 years and has been a magnet for local fashionistas.
Classic 66, also known as Little White Shield, is the best-selling product of K·SWISS while SI-18, a pair of professional tennis shoes, gained popularity since the 1990s on tennis courts.
K·SWISS has been given a new lease on life in the cutthroat sports fashion and footwear market thanks to its acquisition by Xtep in 2019. Banking on the brand’s appeal to Gen Z consumers, Xtep forged a strategic partnership with top venture fund Hillhouse Capital in June 2021 to promote K·SWISS globally.
K·SWISS is one of the several brands Xtep came to own as part of an all-cash, USD 260 million transaction it closed with E-land, a South Korean fashion wear conglomerate, in July 2019. The deal has transferred premium footwear brands such as Palladium and Supra to Xtep.
According to the fifth five-year plan (2021-2025) released by Xtep in 2019, the company's four purchased brands, including K·SWISS, will become the new growth driver in addition to the main brand. Moreover, Xtep projected revenue generated by these new labels to grow at a CAGR of 30% to CNY4 billion in 2025.
As a top domestic sports shoes and apparel brand, Xtep is accelerating its multi-brand strategy, Lanjinger, a business information portal, reported, citing an unnamed securities analyst.
In the future, according to its fifth five-year plan, the Xtep brand itself will target the mass sports market, seeking to establish a competitive edge in the running shoes segment. Meanwhile, the firm aims to expand the market share of sub-brands such as K·Swiss, Palladium, Saucony and Merrell in higher-tier markets.
Headquartered in Quanzhou of eastern China’s Fujian Province, Xtep's competitors in the sports shoes and apparel business include Nike, Adidas, Converse, Puma, Li-Ning(02331: HK), Anta(02020: HK), 361°(01361: HK) and so on.
Xtep shares closed 3.13% lower at HKD 10.52 (USD 1.34 ) apiece Friday on the Hong Kong stock exchange, with a market cap of HKD 27.671 billion.