Recently, Toread Holding Group Co., Ltd. (hereinafter referred to as “Toread”) released its 2017 first-half performance forecast, showing that the company expects operating revenue of 1.278 billion yuan for January–June 2017, up 17% year-on-year; net profit attributable to shareholders of the listed company was 79 million yuan, down 16% year-on-year.
Regarding the increase in operating revenue but decrease in net profit, Toread explained that this was mainly because the travel services segment adjusted its business strategy in response to the tourism market conditions, aggressively expanding international flight ticket services, resulting in a notable revenue increase. However, the outdoor gear segment, which contributes the most to the company’s profits, was affected by market environment factors such as overall sluggish retail consumption and ongoing industry competition, leading to a significant decline in online retail and a corresponding drop in the company’s overall gross margin. Meanwhile, the company continued to strengthen brand investment, conducting multi-channel brand promotion activities, along with other related fixed costs, which resulted in a certain degree of decline in net profit.
In fact, over the past two years, Toread has been building a new business structure and establishing three major business groups: outdoor gear, travel services, and major sports, carrying out a series of acquisitions and mergers. However, these moves have not contributed much profit to Toread so far.
In its 2016 financial report, Toread reported operating revenue of 2.878 billion yuan, down approximately 24.42% from the same period last year; net profit attributable to shareholders of the listed company was 166 million yuan, down approximately 37.13% from the same period last year. In terms of segment performance, the outdoor products segment generated operating revenue of 1.705 billion yuan and a net profit of 275.5 million yuan; the travel services segment achieved operating revenue of 1.173 billion yuan and a net profit of -34.1 million yuan; the sports segment recorded a net profit of -9.9 million yuan. Toread clearly stated that the group is refocusing its business on its core outdoor gear operations, increasing capital and human resource investment, and concentrating on the development and deepening of its multi-brand outdoor business. This announcement also indicates that Toread will increase investment in the outdoor segment in the second half of 2017.