Investors, media friends, good afternoon. I am from the Investor Relations Department of Xtep, Sophia. Welcome to Xtep's 2020 full-year results announcement for investors and the media. This is a webcast. Online, we have our management team, including our Chairman and CEO, Mr. Ding Shui Po, and our CFO, Mr. Yeung Lo Bun. Today's webcast will be conducted in Mandarin. There will be English simultaneous interpretation. After the management's presentation, we will have a Q and A session. If you have questions, please feel free to input your questions in the window on the webcast. Before our Chairman starts, please enjoy the following video. Now may I invite our Chairman and CEO, Mr. Ding Shui Po, to address us. Mr. Ding, please.
Investors, media friends, good afternoon. Welcome to Xtep's 2020 full-year results announcement webcast. I am Ding Shui Po.
Today, I would like to give you an overview of our full-year results of 2020. After that, I will pass the floor to our CFO, Mr. Yeung Lo Bun, to make even more detailed presentation. In 2020, there was COVID-19 and also geopolitical impact. Global economy and trade activities were strongly affected. The group was able to respond fast. We actively adjusted our sales strategy and we put in place different cost control measures. Xtep core brand business in the second half of 2020 had recovered quite significantly. For new brands, because the pandemic continued to be very serious in the U.S. and Europe, their economic activities were affected. Overseas business recovery still needs time. In 2020, our group revenue was more or less the same as last year at RMB 8.2 billion. Xtep core brand revenue was down 7.9% at RMB 7.1 billion.
Our operating profit was down 25.6% at RMB 920 million. Net profit was RMB 510 million. If we exclude the one-off gain of disposing subsidiary company and Supra this year, then in 2020 second half, our net profit was up 23.9% year-on-year. Comparing with first half, net profit was down 46.5%, so there is big improvement. Final dividend was HKD 0.075 per share, more or less the same as last year. Together with interim dividend of HKD 0.065 per share, dividend payouts ratio was 60%. In face of these challenges and opportunities, we have put in place the following strategies. First, for mass market, Xtep core brand, we attach importance to R&D and technological innovation. Concerning running shoes, we have launched professional running shoes in 2016. On the 21st of March, it was the running festival every year.
On the 20th of March in Shanghai, we are going to launch new 160X 2.0. That is the second generation of our professional running shoes. This model is well-recognized by runners. When they wear these shoes, based on their original speed, they are able to be even faster. Actually, many runners are able to break their own records when they wear these shoes. In December last year in Nanjing Marathon, seven runners wore these shoes and all of them broke records. About basketball shoes, we cooperate with Jeremy Lin in launching different series and designs. At the same time, we launch the ninth generation store, and that is the newest store image. In Xiamen, Shenzhen, we already have started the operation of such stores. Last year, we opened the first multi-brand store, and then we presented Saucony and Palladium.
Overall speaking, the image and response has been very good. Number three, last year, because of the pandemic, we seized the opportunities and birth of some new channels. For example, private domain traffic, Douyin, and also some new social media. We also did sales and live streaming. As a result, sales of our brand had improved. For professional sports, Saucony and Merrell, well, they are our professional sports brands. In May, Saucony and Merrell, last year in May, opened stores in China. Altogether, 38 stores were opened. There were three Merrell stores. The others are Saucony stores. For Saucony, it is well-received among runners, and we are doing more and more promotion. At the beginning, brand awareness was low, but then for Saucony shoes, if you look at runners' response, it was very good.
Last year, we worked with Chinese Athletics Association as working partners, and we went into the highest-end cooperation. In the future, there would be further developments. For our third segment, it is athleisure, i.e. Palladium and K-Swiss. Last year, we adopted stringent cost control measures, and we mainly invested in e-commerce. For Palladium in China, we opened 21 self-operated stores. For K-Swiss, the products are still in the design stage, so at the end of this year or early next year, we will focus on store opening for K-Swiss. For Palladium and K-Swiss, originally in 2020, we should have started some large-scale market preparation work. Because of COVID-19, we deferred the plan by one year. We focused a lot on the brand image and products. We are in exploration stage.
Looking towards the future, the Chinese economy under the pandemic recovered fast, and the states introduced the dual circulation policy to stimulate domestic consumption. After the pandemic, people's health awareness is higher, and this will drive more consumption and spending in sportswear products. We are highly confident in the Chinese market. For our Xtep core brand, business has been recovering steadily, and we can maintain growth in 2021. For Saucony and Merrell, we will put our focus on Saucony in China. We will continue to open stores in China for Merrell. Basically, we will focus on the online channel. For China outdoor segment, we still have to wait some time. Regarding Palladium and K-Swiss, for Palladium, overseas business still needs time, so our focus will be on China and Asia-Pacific. For Palladium, we will quickly prepare for store opening.
For K-Swiss, we will be cautious. We will explore about the market. After that, we will see how we can promote our business. The above is an overview about our 2020 work and also our development plan for 2021. I will pass the floor to Mr. Yeung so that he can make a more detailed presentation. Thank you.
Thank you, Mr. Ding. Welcome to Xtep's 2020 annual results presentation. Looking back into 2020, COVID-19 has brought unprecedented challenges. At the beginning of the pandemic, the Chinese government, in order to combat the pandemic, adopted lockdown at the end of January. Most economic activity stopped at that time. For Xtep core brand, 90% of our retail stores had to be closed temporarily. China's measures have been effective, so starting end February, we resumed normal operation. In the first half, results were still strongly hit.
For retail and inventory, our revenue came down about 20%. In the first half, Xtep had 33% decline in net profits. In the second half, revenue gradually resumed positive. In Q4, there is high single-digit growth, and such growth continued in January and February 2021. In January and February 2021, retail revenue was up around 50%. This is because in February last year, the base was low because of COVID-19. Comparing 2019, there was mid to high single-digit growth. This year, in the first two months, discount got back to more or less the same level as previous year. That is 25% off. In 2020 second half, comparing second half 2019, net profit was up 3.1%. If we exclude the sale of land one-off gain in the end 2019 and also the sale of Supra of profit RMB 3.05 million, the second half net profit was up 22.3%.
In 2021, this growth will continue. Because 2020 base was low, we believe that in 2021, overall growth would be very strong. For new brands, the pandemic had also caused a heavy blow. Development plan in China was deferred by more than half a year. In the U.S. and Europe in 2020, everything almost stopped, but new brands only accounted for 13% of the overall total. Even though there was impact on the group, the impact was controllable. Please turn to page two of our PPT. Sales was more or less the same. It came down by 0.1%. Operating profit down 25.6%. Net profit attributable to equity holders down 29.5%. In the second half, results improved. If we exclude one-off gains, net profit in the first half was down 46%, and in the second half, it was up by 23.9%.
We will explain in greater detail later. Our financial position is healthy. Net cash and cash equivalents was RMB 2.25 billion. Final dividend, HKD 0.075 per share. Dividend payout ratio was the same as previous year, 60%. Xtep branded stores, there are 6,021, so down 300- odd stores from previous year. We only closed the less profitable small stores, and we opened big stores in good locations. Page four of PPT. Consolidated income statement. Revenue was more or less the same as last year, down 0.1% at RMB 8.17 billion. Gross profit down 9.9%, RMB 3.198 billion. This is because for Xtep core brand in 2020, we got back the inventory, and in resale, GP margin came down. We offered some subsidy to tenants or to distributors in terms of rent and decoration expenses. This is also reflected. SG&A down 1.4%.
It is a smaller decline than gross profit. This is because for K-Swiss and Palladium in 2019, had only five months of results being consolidated. For 2020, it is full-year. If we consider Xtep core brand, SG&A was down 16.5%. I will give more detailed explanation later. Operating profit down 25.6%. Profit for shareholders down 29.5%. If we exclude one-off gains, the growth should be 23.9%, comparing with first half down 46.5%, it was a big improvement. Earnings per share, down to 32.2%, RMB 0.208 . GP margin down 4.3% at 39.1%. Several reasons. One, Xtep core brand collected back the Q1 inventory, and the impact was around one percentage point. Second, in the past, we offered rental and decoration subsidy to distributors. Now we use the format of discount, so it is no longer reflected in selling expenses.
There was an impact of 2.5 percentage points, so the absolute amount is RMB 175 million. For this amount, if you add back to the 2020 sales, then for the same period, our sales was up. GP margin will not come down that much. Point number three, in 2020 Q4, we adjusted our pricing mechanism so that our products are more competitive. As a result, there is impact of 1.5 percentage points. For new brands, the share of self-operated stores was bigger and so GP margin improved. Because of new brands, there is 0.7% improvement in GP margin. Net profit margin down 2.6%, smaller than the decline in operating profit margin. So later on, we will give more detailed explanation. Page five, revenue by brand nature. Here you can see Xtep core brand have a share of 86.9%, then new brands up 3.1%.
In the coming five years, Xtep core brands will be able to maintain a low to mid single-digit growth. For new brands, their growth will be faster. Page six, income statement. Core Xtep brand. Sales was down 7.9% because of COVID-19. We called back around RMB 300 million Q1 inventory, and then they were sold on e-commerce. Second, we also reduced the inventory pressure. We adjusted 2020 Q3, Q4 and 2021 Q1 orders. For Q2 orders, it had resumed growth in 2021. Point number three, the accounting method is different. In the past, we offered rent and decoration subsidy to distributors, and now we use the form of discount, so it is no longer reflected in selling expenses. So there is RMB 175 million of impact. If you add back this to our sales, on an apple-to-apple basis, should be RMB 7.28 billion, only down five point something percent.
GP margin, 41% instead of 38.9%. Point four, we believe that for core brand Xtep, sales and GP margin should resume growth. GP margin declined 4.9% at 38.9%. The reasons were explained already. Now we expect that for this year, GP margin will grow. So GP margin in 2021 will be small. SG&A to revenue ratio, down 2.9 percentage points at 27.9%. Two reasons behind. First, as explained just now, accounting mechanism is different. In 2020, we offer to sole distributor the rent and decoration expense subsidy. We changed the format to discount, so it is no longer reflected in the selling expenses. Besides, we had incurred marathon sponsorship expenses. Operating profit margin. If we exclude one-off gains, net profit was down 15%. In second half, it was only down 10%. Net profit down 18%. If we exclude one-off gain, it is only down 12.6%.
In the second half, up 22.3%. In the first half, it is down 32.9%, so there is a big improvement. Here, a big reason is because you can see our net profit margin in the first half, it resumed growth. This is mainly because we have changed our accounting arrangement in relation to subsidy. So first, we are able to reduce VAT expense. Secondly, in the past, if we offer subsidy by means of selling expenses, then it is cash expense. It cannot be tax deductible. Now we deduct that from sales so it can be tax deductible. So later on, you will be able to see that our tax was smaller. Effective tax rate is also down. So later on, I will give further explanation. Page seven. Core Xtep brand revenue by products. Footwear declined smaller than apparel. Its share also increased by 2.2 percentage points during the pandemic.
E-commerce share was bigger, and e-commerce sales are now accounted for 80% of footwear. The long-term goal is that footwear and apparel should have more or less the same share. Page eight. Core Xtep brand gross profit margin, down 4.9 percentage points at 38.9%. Reasons were stated already. I won't repeat the points. We expect that in 2020, overall GP margin had already seen the bottom. This year, it will increase gradually. Page nine. Core Xtep brand SG&A analysis. SG&A was down 16.5% for two reasons. One, because of the pandemic, we reduced a lot of costs. For example, advertising and promotion expenses. In 2019, it's RMB 970 million, and it came down to RMB 700 million-odd. Its share of revenue was also down to 11%. In 2018, we offered decoration and rent subsidy to distributors. It was reflected in selling expenses at that time.
In 2020, we reflected that in the form of discounts, so there is 2.5% impact. We attach much importance to R&D, so R&D expenses did not decrease. It was up 8.8% at RMB 220 million. Share of revenue was up from 2.5% to 3%. Page 10. Core Xtep brand operating profits down 14.8%. If we exclude one-off gain, it is only down 15%. In the second half, originally it was down 23%, and it improved to only down 14.8%. Effective tax rate. Last year it was 34.8%. It improved to 33.7% this year. However, it's still higher than the 25% normal rate in China. Three reasons. First, overseas business incurred loss, so it reduced profit before tax. Loan in the Hong Kong banks, the interest is not tax-deductible. Number three, we have to make provision of 5% for the China profit. Profit attributable to shareholders, down 29.5%.
It is RMB 513 million. In the first half, net profits improved significantly. In the second half, we are up 23.9%. Page 13. Final dividend, same as last year, HKD 0.075 per share. For the whole year, dividend payouts were 60%. Page 14, working capital analysis. Inventory turnover days in 2020 was up to 94 days because we collected Q1 inventory from the distributors. For new brands inventory this year was consolidated to the group. Most bought-back inventory was disposed of, so turnover days at the end will be at 74 days. Receivables, because of the pandemic, was significantly up. This is because we took the initiative to offer one more month credit period to the distributors, so turnover days was up to 130- odd days in the middle of the year.
It had resumed normal, 120 days within the normal credit period. Payables turnover days in the middle of 2020 rose to 142 days. At the end of the year, it came down to 107 days. 107 days was more or less the same as the past five-year average. Overall speaking, the final inventory at the end of last year was around four months. It rose to 5.5 months at the end of June because of COVID-19. At end 2020, it improved to below six months. We believe that at the end of this year, the final retail inventory will decline to around four to 4.5 months, which is the normal level. Page 15, trade receivables analysis. Because of COVID-19, we offered one more month credit period to distributors. So in 2020 interim reports, we made provision.
It is mainly because we are trying to be more conservative, so we made some provision. In the second half, the pandemic improved gradually, so distributors' cash flow had improved. In the second half, we back-provisioned RMB 828.2 million of receivables. We believe that receivable turnover days for 2020 and bad provision will see a chance as long as distributors' cash flow continues to improve. Page 16, balance sheet. In 2019, the group had done acquisition and new business was still at a loss. The group still have net cash. Net cash was up 5.6% at RMB 2.25 billion. Current ratio 2.7 x, which is even better than the previous year, 2.5 x. Gearing ratio improved from 19.1% to 17.2%. Page 17, cash flow. In 2020 end, cash balance was up by RMB 560 million-odd. This is because of net operating cash inflow of RMB 320 million.
We used cash flow to pay back bank loan of RMB 77 million, and we pay out dividend of RMB 280 million. Now let's take a look at financial performance of K-Swiss and Palladium. Page 18. K-Swiss and Palladium accounted for 12.2% of total revenue of the group. Revenue, RMB 999 million. Operating loss, RMB 104 million. This is worse than our budget. Looking at the pandemic in Europe and the U.S., at the end of this year, there would still be a loss, but the loss will be smaller than in 2020. Next, business review. First, page 20. Core Xtep brand. We have 6,021 branded stores globally, down 358 stores. Selling area was more or less the same as last year. We closed only small stores. We opened big stores. In the second half 2020, some Xtep brands were redecorated. The newly opened stores are the ninth generation stores.
For the new store image, it can bring to customers better experience. Last year in Xiamen, we opened the first multi-brand collection store. This store is known as X-STREET. It sells Xtep, Palladium, Saucony, and Merrell products. For area, 1,500 sq m . The feedback was very good. On the first day, online and offline sale reached more than RMB 5 million. Page 21, products. In 2019 end, we launched the first Xtep 160X brand running shoes. Feedback was very good. In the Berlin Marathon, our spokesperson was able to complete a full marathon, breaking a record. There are eight athletes sponsored by Xtep wearing 160X, and they ran in different marathon races, and they won championship. We worked with Jeremy Lin, and we introduced one more basketball products. In the past, it accounted for less than 1% of total sales, now already 3%.
You can see that our cooperation with Jeremy Lin brought about very good results. For limited edition Jeremy Lin product, it was well-received. Last year in Beijing Sanlitun WZK shop. In the video, you can see that the products were sold out very fast. Page 22, lifestyle and crossover products. For crossover products, this is a way we increased sales and enhanced our awareness. In 2020 in June, we collaborated with Shaolin Temple. We introduced the crossover product. We opened a store in Shaolin Temple. Last year, in October in Shanghai Fashion Week, we participated in it. Last year, we also launched the Jiang Ziya series. Both these collections contain some Chinese elements, and market feedback was good. Together with Batman, Ali, and so on, we introduced different products. For this crossover work, sales was very good. Page 23, brand promotion.
We sponsored marathons and other running races to build our leading position in running. In 2020, because of the pandemic, the number of marathons that we sponsored has decreased. In order to reduce human contact, we introduced virtual marathons so runners can upload their results onto our app, and then we will offer them certificates. We sponsored 12 physical marathons and nine virtual marathons. Altogether, we attracted more than 1.5 million participants joining these physical and virtual marathons. Page 24. We sponsor celebrities, sports athletes, and also popular stars and variety shows to promote our products. We launch crossover products with pop stars, and these products also sell well. Page 25. Saucony and Merrell updates. Because of COVID-19, Saucony store opening plan in March 2020 was deferred to the end of May. At the end of May and early June in Shanghai, Beijing, we opened stores.
Last year in Beijing, Shanghai, Dalian, Shenzhen, we opened 32 stores. In May, Saucony launched the first carbon fiber shoes with very good market response. Based on some statistics in Shanghai Marathon and Guangzhou Marathon, runners wearing Saucony shoes were able to get ranking of number four and number seven. In the past, they could not enter top 10. Last year, Saucony registered a threefold year-on-year increase on online sales. In March last year, we started operating Merrell. We opened the first physical store last year. Gradually, we opened more and more stores. In Tmall, we opened a flagship store last year for Merrell. E-commerce sales was good, up 38% year-on-year. Page 26. K-Swiss and Palladium updates. For K-Swiss, this brand is still in consolidation stage. In early next year, there should be a brand-new image store and new products.
K-Swiss in Hong Kong and Taiwan have 43 stores. In Europe and U.S., it mainly does wholesale. Business was almost suspended there because of the pandemic. It only accounted for mid-single-digit figure in share. The loss is controllable. For Palladium, the same as K-Swiss, the American and European business was hit by the pandemic. Asia-Pacific sales came down, however, is still quite stable. At the end of December, there are 57 self-operating stores in China, Hong Kong, and Taiwan. During the pandemic, K-Swiss and Palladium online sales performed quite well. In North America, it was up 45% year-on-year. In EMEA, it grew by 52% year-on-year. Next, outlook, page 28. First, Xtep core brand operating performance continued to improve. In Q1 2020, it's 20% revenue decline. In Q2, low single-digit decrease. In Q3, mid-single-digit growth.
Q4, high single-digit growth, and the growth continued till February this year. The growth was almost 50%. We expect that for this year, Xtep brand operation would be quite good. We are confident that the Xtep brand sales and profit will not be worse than 2019. Comparing with 2020, there should be a significant growth. Page 29. For JVs, development was deferred because of COVID-19. We have confidence about the future, especially Saucony. For Saucony, it has strong synergy with Xtep. In some professional runners, good reputation has been built. This year, 30 - 50 stores will be opened. They are mainly Saucony stores. This year, because of more new stores will be opened, sales will go up. This year, the loss will be at around RMB 90 million, and the growth or the Saucony will account for about half.
For K-Swiss and Palladium, the pandemic mainly did a big hit to overseas business. For K-Swiss, as such as now, we believe that at the beginning next year, there will be brand-new stores and products and store image. For Palladium, this year, we will open 30 - 50 stores. These stores will be self-operated. Because Europe and U.S. are still affected by the pandemic, there will still be loss. K-Swiss and Palladium in 2021 will not lose more than 2020. The above is my presentation. Thank you.