Investors, good afternoon. Welcome to Xtep's 2023 Annual Results Presentation Investors Session. I am the Investor Relations and Sustainability Director, Sophia. Let me introduce to you our management in attendance: Chairman and CEO Mr. Ding Shui Po, Director Mr. Tian Zhong, our President Mr. Tian Zhong, CFO Mr. Yang Liu Ping. Today's presentation will be conducted in Mandarin with English simultaneous interpretation. Our management will first present the 2023 Annual Results, followed by Q&A. Before our management presents, please enjoy our corporate video concluding our achievements in 2023. Now I will pass the floor to our Chairman and CEO Mr. Ding Shui Po. Mr. Ding, please.
Investors, ladies and gentlemen, good afternoon. I am Ding Shui Po. Thank you for attending Xtep's 2023 Annual Results Presentation. 2023 is a year full of challenges. Consumption is being restored gradually and slowly.
But then in consumer products, well, sportswear saw the best growth. In 2023, it is our 15th anniversary of our listing. So originally we were a local company. Now we are a global, multi-brand company. Looking at macro level, with sports nation policy of China, basically sports has penetrated to a wider and wider mass. And according to national statistics, in 2023, in terms of sports industry, we have got already 2.89 sq km and 370-odd km in terms of sports distance. And in 2023, for marathon races, there is strong recovery already, and it is already the pre-pandemic level. And for some races, the number of registration or enrollment exceeded 200,000-odd. In the past, usually it's only at 30,000-40,000. And in the past year, we helped athletes, and we broke Chinese marathon records two times.
Our wear rate has all along been number one. Now, when it comes to our profession and our professional sports standard, we are influencing the masses. Running is a determinant in our growth. Looking at numbers in 2023 for our core Xtep brand, whole year retail sell-through achieved 20% year-on-year growth. Inventory turnover days fall to 4.5 months. This is a healthy level. Saucony is the first profitable brand for us, and its revenue and profit reached record high. Now, our core brand focuses on mass sports. For the new brands, they focus on high-end markets. In terms of channels' products and marketing, they built a differentiated portfolio. In terms of our strategies, our core brand and new brands achieve synergy, and the synergy is more and more realized. Xtep and Saucony together lead our group to become number one running brand in China.
In the future, we will continue to focus on running, and we will make use of our professionalism to affect mass mindshare. And we are going to meet diversified needs of consumers. Now, last year we acquired the Chinese business of Saucony and Merrell. For new brands in the China market, our confidence is being materialized. Now I will pass the floor to Mr. Yang and Mr. Tian so that they will present our financial performance and results. Thank you.
Thank you, Mr. Ding. Good afternoon. Welcome to Xtep's 2023 Annual Results Presentation. Looking back into 2023, the global economy continued to see uncertain development. At the beginning of the year after the pandemic in China, economic growth had been fast, and our retail sales through for our core brand at the beginning of the year was positive, especially in March and April. There was 40% sales through growth.
However, in May and thereafter, growth momentum slowed down significantly. For the core Xtep brand in 2023, for the whole year, retail sell-through achieved 20% growth. This is better than our peers, and it is much better than the overall China's retail performance. In 2023, Xtep Group's major goal is to maintain growth and to clear inventory. And we have achieved these already. Please turn to page two of our PPT. Looking back into 2023 whole year results, our total revenue growth was 10.9%, at historical high at CNY 14.346 billion. For the core Xtep brand revenue growth, it is 7.4% to CNY 11.947 billion. For new brands, professional sports segments Saucony and Merrell, revenue growth was almost 100% at almost CNY 800 million. In the athleisure segment, revenue growth was 14.3%. In the China region, the growth exceeded 200% at CNY 465 million.
Saucony became the first profitable brand among the four brands. In only three and half years, it achieved such profits and also more than 100% growth thereafter every year. So this shows that when we operate multiple brands, we are very capable. Our profits achieved historical high at CNY 1.03 billion, up 11.8% year-on-year. For the core Xtep brand, our profit grew 10.4% at CNY 1.486 billion. Our group inventory came down significantly by 21.6% to CNY 1.794 billion. Comparing with the interim result stage, inventory of CNY 2.407 billion, well, it is a significant decline of CNY 613 million or 25.5%. Channel inventory has returned to a healthy level at four to four and half months level. For the five brands, their store counts globally as of 31st December 2023 was 8,583, an increase of 549 year-on-year.
Our operating cash net inflow grew 1.2 x to CNY 1.255 billion, and it is more than our net profit of CNY 1.03 billion. Because of our healthy cash flow, the board recommended a final dividend of HKD 0.08 per share, and the payout ratio was 50%. Since 2008 listing, we have maintained a good dividend payout. We have never paid less than 50% of profits to shareholders. We'll continue to keep this good record. Next, page of the PPT income statement: revenue growth 10.9% to CNY 14.346 billion. Gross profit grew 14.3% to CNY 6.05 billion. It is faster than revenue growth because gross margin was up 1.3 percentage points to 42.2%. SG&A rose 18.4% to CNY 4.909 billion. The reasons for the increase will be explained later. Operating profit up 7.9% to CNY 1.58 billion. Net profit up 11.8% to CNY 1.03 billion.
Net profit margin up 0.1 percentage point to 7.2%. For 2024, no matter whether it is in Mainland China or overseas, because of economy and consumption needs, we believe that the year will still be a difficult one, but we are still confident to achieve considerable growth. Now we have to maintain a healthy inventory level. For 2024, our target group revenue growth will not be less than 10%. When there are new brands making profits and with some growth in our profit margin for our core brand, our net profit growth will be faster than overall revenue growth. Page five, consolidated balance sheet. Now this is at a healthy level. We have net cash position. The current ratio last year was 1.9 x. It improved to 2.1 x. Bank borrowings are mainly used in dividend payouts in Hong Kong.
So more than 90% of our business is in mainland China. Remittance to Hong Kong is subject to capital control. For shareholding profit, we have to pay 5% share profits tax. Because of the interest rates in China have come down and Hong Kong's interest rate went up, last year we already started to apply to remit funds to Hong Kong. In the first three months of this year, we successfully remitted CNY 1 billion to Hong Kong, and we repaid CNY 1 billion of borrowings to reduce interest expense. Then we paid CNY 435 million to buy Saucony and Merrell's China 50% shareholding and also CNY 490 million spent in CapEx. We also paid a dividend of CNY 470 million. So the details will be explained in the information. Now, the total working capital days turnover was 16 days more than same period last year.
Comparing with the interim report 2023 of 88 days, it has improved 5 days. Now, if you look at inventory turnover days, the interim level was 107 days, and it came down to 90 days, more or less the same as the end of last year. For absolute amounts, the decline will be even more significant. In 2023 year-end inventory, it came down by 21.6% to CNY 1.794 billion. Comparing with the interim period of 2024 CNY 2.407 billion, within half a year it has declined CNY 613 million or 25.5%. Receivable turnover days up 8 days to 106 days, and it is within our 120-day credit period. Then for our core brand revenue growth, 7.4%, CNY 11.947 billion. For kids, its growth is 11%. Gross margin went up 0.7 percentage points and gross profit up 9.1% to CNY 5.013 billion.
Operating profit margin, more or less the same as last year, 15.8%. Net profit grew 10.4%. Net profit margin 12.4%, higher than 12.1% of last year. This is because of good tax planning, and we reduced tax expense. Looking into 2024, because the consumption situation is not very positive for the core brand with running and also kids' business drive, we believe that there will be stable growth. But for the time being, our target will still be more conservative so as not to have too much inventory. And we have our own supply chain in our group. So if we think the market is turning positive, we can react fast. So as such as now, our group's target growth is 10%. It is a more conservative minimum growth that we expect. And then for the professional sports segment, for Saucony and Merrell, revenue growth almost 100% at CNY 796 million.
Gross margin came down 0.9 percentage point, mainly because last year we started the franchise model. Wholesale income gross margin will be lower than direct operation. And last year, wholesale accounted for 13% roughly of the total. Operating profit, CNY 8 million. Saucony's profit is around CNY 10 million. Merrell, a small loss of CNY 2 million. Saucony has become the first profitable brand among the four brands for new brands. Looking into 2024, for Saucony and Merrell, they will have quite good growth. But because the volume started to increase and so the economy is also uncertain, we believe that the sales target in 2024 will be 30%-40% growth. And then K-Swiss and Palladium, athleisure segment, revenue growth 14.3%. This is mainly from China. Overseas business came down around 9%. China's sales last year at the same period was CNY 143 million.
It grew more than 200% to CNY 464 million this year, accounting for 29% of the segment. Gross margin last year was 37.6%. It improved to 44.8% because in China sales was DTC-based. DTC gross margin is higher than overseas wholesale-based business. Now, in China, DTC scale continued to increase, so we believe that gross margin can continue to improve. Operating loss, CNY 184 million. Last year is CNY 189 million, so there is slight improvement. Looking into 2024, overseas business will continue to face uncertain challenges. We believe recently some of our competitors announced rather weak 2023 results. Their inventory has increased relatively. So for overseas business, we are relatively conservative. However, in China, with strong growth, we believe that in 2024, K-Swiss and Palladium, overall speaking, will see quite good growth. However, in China, growth was mainly from channel expansion, and the channel is mainly DTC.
We will also increase advertising expenses. So this year for athleisure segments, it will still incur a loss. However, we will control the amounts of loss so that it won't be bigger than that in the past two years. Page 8, SG&A. SG&A up 13.9% to CNY 3.536 billion, accounting for 29.6% of revenue, up 1.7 percentage points. The reason behind the increase is that A&P expenses rose 17.2% or CNY 213 million, accounting for 13.1% of sales. It is bigger than the budgeted amount by 11%-13% for the following reasons. First, in 2023, marathon races have resumed normal, so we restored normal sponsorship. In 2021, the World University Games should be hosted. However, it was delayed to 2023, so expenses increased in 2023. Sales were smaller than expected in 2023, but some sponsorship fees have already been contracted, and it cannot be canceled.
So that's why the share of A&P expenses of revenue was more. But we expect that in 2024, it will go back to 11%-13%. We attach much importance to our products being competitive at the same time in terms of performance or functional running shoes, Saucony or Xtep. So for our R&D expenses, it grew 33.9% or CNY 100 million. It's 3.3% of total sales. We believe that in 2024, this ratio will be at around 3%. Besides, we have done some organizational optimization. We have reduced manpower. So staff costs came down 6.5% to CNY 562 million. And last year, it accounted for 5.4% of revenue. This year, 4.7%. So that is my presentation on financials. Now I will pass the floor to Mr. Tian. Thank you.
Thank you, Ricky. Investors, good afternoon. Now I'm going to present to you the operations of various brands.
In the past one year, Xtep grew as number one running shoe brand in China, has an even bigger mindshare. Page 10, let's take a look at the core Xtep brand. Now, under the brand strategy of running shoes number one, we continue to reinforce our number one leading position in the running area. According to Sullivan's information, in 2023, in China marathon races, among all running shoes, our wear rate is number one as of March 2024 in Beijing, Shanghai, Guangzhou, Xiamen, in 6 major marathons. For sub-3-hour runners, our Xtep shoes wear rate is as high as 31%. It is much higher than all the other brands, including international brands, by around 10%. In Beijing marathon, we are more than the number two position by 20%. Now, page 11, why is it that our running shoes can continue to be well received by runners?
We think that we have done the following right. Number one, product innovation. We insist on the annual iteration of 160X Champion running shoes. Our performance continued to be upgraded. Number two, we use professionalism to affect the mass. We expanded and widened the product matrix. So we transferred the carbon fiber plate technology to mass shoes so that we offer a better performance-price ratio. And we lowered the threshold for professional running shoes, for example, 260X and 360X. Since launch in the beginning of 2024, we received very good market feedback, and sales rate is also much faster. Now, for our Xtep running club, as of the end of December 2023, we have 65 clubs with more than 2 million members. So this has become a very valuable private domain traffic source. And then when our brands are being upgraded now, for example, in basketball, we launch new products.
In 2023, we introduced Yutian 1.0 and also Ling Ren 1.0. And then we also have pop stars' influence, pop stars including Beasley and Jeremy Lin. So we're able to offer better products to young consumers for sustainability. We have created an environment-friendly marathon, and then we discharge our social responsibility in the running area in 2024 in the Xiamen marathon race. Among 30,000 participants, we make use of recyclable or recycled fiber to make the athlete's T-shirt to reduce pollution. And then in terms of channels, we open larger stores and we open good stores. We expand store area and we upgrade store image. As of 31st December 2023, we have 6,571 Xtep adult stores. More than 60% are ninth-generation stores, Xtep Kids. Our positioning is we are a sports growth expert for adolescents and also kids.
Last year, we worked with Shanghai University of Sport and Tsinghua University, and we improved the anti-shock technology in adult 160X Champion running shoes to the kids' shoes. We introduced Xtep 100 2.0 PRO. In March this year, we introduced the A+ Healthy Growth Sneaker for kids. We reintroduced or we redefined professional comfort, and we offer a better protection system for the kids. Altogether, we have 1,703 stores for Xtep Kids. For new brands, we sped up our development in terms of brand influence as well as our sales capability. We achieved good results. Now, Saucony has been the first profitable international brand, and this shows that Xtep Group has good capability in operating international brands. Page 15, Saucony's profitability is mainly because of clear positioning and also sharing of resources with the core Xtep brand.
For positioning, Saucony's brand position is duo elites crowds. So in other words, running elites and also social elites for Xtep's position, mass sports. So there are synergy and differentiation in terms of resources. If you look at our running club as well as our R&D center, sharing resources and also sharing of marathon running resources, we have achieved some good results. In December last year, we acquired the Chinese business of Saucony and Merrell. So this shows that we have confidence in the China market. We also have confidence in our own operation capability. Page sixteen, under the lead of Saucony, the professional sports segment has achieved almost 100% growth. For Saucony channels, their stores are mainly in high-tier cities, and for tier one and new tier one cities, more than 80%. At present, there are 110 stores, an increase of 41 stores from 2022.
And then the brand continues to sponsor Yue Shan Xiang Hai. So in other words, we are focused on the duo elites groups, and we focus on precise marketing of competitions. And then for Merrell, we focus on outdoor activities and also fast running. Then for K-Swiss and Palladium, Chinese business growth was fast. In scale, it increased by more than 200%. For K-Swiss, the positioning is mainly DTC. It is focusing on high-end shopping malls in high-tier cities. It has entered The Venetian Macao. So this is an important step in the high-end developments. And we will also be focusing on Asia Pacific. As of 31st December 2023, K-Swiss has 101 stores in Asia Pacific, an increase of 29 stores from 2023. Page 18, for Palladium, the Chinese market has finished the brand rebuilding or reshaping. Development was fast. Results, growth has exceeded expectations.
So we are aware of young consumers' consumption habits. We make use of Dylan Wang, Jeremy Lin, and other celebrities' fan effects, and we have got many best-selling styles. We enhanced the brand awareness, and gradually it has become a brand well-liked by young people. As of 31st December 2023, Palladium in Asia Pacific has 94 stores, an increase of 38 stores from 2022. Our stores are mainly in high-tier cities and core business districts and high-end shopping centers. Prospects, Xtep Group insisted on the development model of being number one running brand in China. For our core brand, we focus on mass sports. We will continue to focus on running, and we will continue to reinforce the market awareness of world running shoes, China, Xtep. We will improve our products, especially in expanding our market segment.
And then in terms of channels, we'll continue to open bigger stores, better stores, and we will enhance our image and experience for offline. For online, we'll focus on being number one in running, and we will offer more products with a higher performance-price ratio. For international new brands, we will focus on high-end markets, and we will try to create growth for the second curve for brands led by Saucony. Thank you.