Sportswear maker and distributor China Dongxiang warned of lower profit margins and revenue for the first half of 2011, sending its shares to a near three-year low and triggering selling across the sector.
China Dongxiang said the sports goods industry in China faced challenges from stiff competition and excess inventory, noting that it had been shifting its focus from wholesale to retail management by providing stronger support to distributors.
The company said over the weekend that it expected revenue to decline 45 percent year on year for the first half, and its profit margin attributable to shareholders to fall to 17-19 percent, from 37 percent a year earlier, as it cuts back on sales to distributors in China to reduce inventory at the distributors’ end.
(Source: CNBC)