Beijing Sanfo Outdoor Products has signed an agreement to be the exclusive retailer in China for Norrøna, the technical outerwear company from Norway, for the next three years. This comes after the previously reported joint venture and licensing agreement between Tutwo, the other large Chinese outdoor retailer, with Salewa (Compass Vol. 9 – 1+2 – Jan. 21, 2016).
Sanfo has been embarking on other projects and investments since its successful initial public offering on the Shenzhen stock exchange last December. It has added more than 30 people to its staff in order to build up its e-commerce capabilities, to develop its range of private label products and to organize outdoor events.
While opening new physical stores, the company wants to push the proportion of sales generated online from 15 to 25 percent of its turnover. It also wants to see private label rise from 3 to 8 percent of revenues. For this year alone, Sanfo is planning to organize more than 40 events, including trail running races that may involve up to 3,000 people.
The higher overheads will probably lead Sanfo to report a decline of at least 58 percent in the net profit for the first quarter of 2016, in spite of a sales increase of around 10 percent. A preliminary financial report indicates that its net profit for the period, ended March 31, may end up between 100,000 yuan renminbi (€13,571-$15,445) and RMB 600,000 (€81,424-$92,700).
For the 2015 financial year, still unaudited figures show that the company recorded a net profit of RMB 31.0 million (€4.2m-$4.8m), up 11.18 percent from the previous year, as sales rose by 12.52 percent to RMB 328.0 million (€44.4m-$50.7m).
The company's share price stood at RMB 74.04 (€10.11-$11.43) today, giving Sanfo a stock market capitalization of RMB 4.96 billion (€677.5m-$765.9m). The stock price had risen to more than RMB 100 (€13.56-$15.47) at the beginning of this year from an introduction price of RMB 9.42 (€1.28-$1.46) on Dec. 9.
By the way, we have been unable to determine whether Sanfo is bigger than Tutwo as a retailer. In contrast with Tutwo, which has also many franchised stores, the wholesale business represents only a small portion of Sanfo's turnover. Anyhow, Sanfo and Tutwo don't sell the same types of outdoor products in their multi-brand stores. Unlike Sanfo, Tutwo doesn't market big international brands such as The North Face. It works largely with Chinese brands such as Toread, which is also one of its shareholders.