Mainboard-listed China Sports International, the branded sports fashion footwear and apparel company based in China, says net profit after tax for the second quarter ended 30 June 2010 (2Q10) fell 63.8% to RMB13.1 million ($2.6 million) from RMB36.2 million in 2Q09.

In 2Q10, Group revenue declined 40.7% to RMB311.0 million from RMB524.3 million in the same period last year (2Q09). The decrease in revenue was mainly attributable to increasing competition in the industry, especially for footwear products that resulted in weaker demand for the group’s products. In 2Q10, gross profit fell 42.8% to RMB48.0 million compared to RMB84.0 million in 2Q09. Earnings per share in 2Q10 was 1.99 RMB cents while net asset value per share as at 30 June 2010 was 113.03 RMB cents.

Overall footwear gross profit margin improved in 2Q10 to 9.2% from 8.7% in 2Q09 as YELI footwear gross profit margin remained relatively stable while OEM footwear gross profit margin improved in 2Q10 from the low base in 2Q09.

Footwear remained the main contributor to group revenue, accounting for 73.7% of revenue in 2Q10, down from 77.9% in 2Q09. Apparel contribution to group revenue increased to 23.9% in 2Q10 from 21.6% in 2Q09. Accessories contribution to group revenue jumped to 2.4% in 2Q10 from 0.5% in 2Q09. Both apparel and accessories contribution to group revenue increased in 2Q10 due to more YELI specialty stores being opened which sell a broader range of YELI products.

In 2Q10 selling and distribution expenses decreased by 26.4% to RMB21.5 million from RMB29.2 million in 2Q09. Despite the decline in group revenue, the group continued to invest in advertising and promotional activities in order to grow YELI brand value as well as to expand distribution network for FIFA related business. As a result, selling and distribution expenses accounted for approximately 6.9% of the Group’s revenue in 2Q10, up from 5.6% in 2Q09.