Fujian-based sportswear maker 361 Degrees International Ltd said its net profit declined 37.6 percent to 715 million yuan ($113.73 million) in 2012.

Its gross profit margin was 39.8 percent, down 2.6 percent year-on-year. The inventory balance was at 460 million yuan, while the value of work in progress increased to 116 million yuan from 60 million yuan in 2012.

The Hong Kong-listed company said that oversupply and fierce competition drove down the average selling price of its products and the gross profit margin.

To control its inventory levels, 361 said it has agreed with its distributors to cancel some of the orders placed at trade fairs for not yet produced goods in 2013. The company closed 96 stores in the fourth quarter of 2012.

Chinese sportswear producers are facing challenging conditions since 2011 with high inventories constraining the companies' development.

In 2012, Hong Kong-listed sportswear company Anta's net profit dropped 21.5 percent year-on-year to 1.36 billion yuan.

Li-Ning, another Chinese sportswear giant, also issued a profits warning for 2012.

[email protected]