Hongxing Erke Performance Downward Brand Facing Torture

If we say that in the past 10 years, when the domestic sportswear brands are separated from each other, a large enough market will enable different brands to find their own space. So 10 years later, the same is the domestic brand, has also been "Echelon" points.

Just like Nike and Adidas occupy the first tier of foreign brands, Reebok and Puma rank the second tier, and Diado (Diadora) has been marginalized. There are domestic eye-catching performance, there are rapid expansion, there are also depressed. In 2009, the turnover of sports brand enterprises such as Lining, Anta, PEAK and XTEP increased by more than 20%, while Hongxing Erke failed to enjoy the same "glory". In addition to the mediocre performance in 2009, Hongxing Erke income decreased by 13.5% in the first quarter of this year, and gross profit dropped by 31.9% compared to the same period last year. This year, Hongxing Erke also failed to spot checks in Harbin, Shenzhen and other places. Brand and performance were tested at the same time.

　 Market continues to rise, Hongxing Erke performance downward 

Hongxing Erke's 2009 performance report shows that its sales volume is 1 billion 999 million yuan, down 30.8% from 2 billion 889 million last year. The decline is also a sharp decline, which is quite different from other domestic sports apparel listed companies.

Lining's sales revenue in 2009 was 8 billion 387 million yuan, an increase of 25.4% over the same period last year. Net profit increased 31% from last year's 721 million yuan to 945 million yuan. Anta sports earnings report shows that the net profit in 2009 increased by 39.8% over the same period last year, reaching 1 billion 250 million 900 thousand yuan, exceeding the average profit expected by analysts for nearly 1 billion 130 million yuan.

If Lining and Anta, after years of accumulation, are relatively successful in terms of Hongxing Erke, PEAK sports, which just landed on Hong Kong stock last year, will be more revealing. In 2009, PEAK reported that the total sales volume was 3 billion 95 million yuan, an increase of 51.6% compared with the same period last year, and net profit increased by 67.1%, reaching 628 million yuan.

"Compared to 2009, the market environment improved this year, and the related national consumption policy has brought certain opportunities to the sporting goods market. This year is also a "sports year", and the inspiring effects of major sports events such as the Winter Olympics and Asian Games will create more opportunities for sporting goods developers. This is Anta sports vice president Zhang Tao's judgement on this year's domestic sporting goods market. However, the first quarter performance of Hongxing Erke did not reflect the supporting role of these "effects".

Hongxing Erke reported in the first quarter of 2010, as of March 31st this year, the company's revenue was 491 million yuan, a year-on-year decline of 13.5%, gross profit 155 million yuan, down 31.9% compared to the same period last year.

　 Quality is frequent, brand is facing torture.

In addition to poor performance, Hongxing Erke brand is not very peaceful. In February this year, the Harbin Bureau of industry and Commerce passed the quality sampling inspection of clothing and knitted goods sold by the major shopping malls and clothing stores in the city of Hakkas. The physical and chemical indicators such as formaldehyde content, pH value, signs and instructions for use, fiber content, color fastness, marble top breaking strength and washing size change rate were mainly detected. Among famous sports brands, Hongxing Erke is the only unqualified brand named.

In April of this year, "Hongxing Erke" was also mentioned in the "4 quarter of last year, the results of the autumn and winter clothing inspection in the circulation sector of Shenzhen".

Luckily, Hongxing Erke performs well in its main attacking tennis products market. At the end of last year, the "best tennis shoes brand survey" jointly launched by people's sports channel and Qianlong tennis shoes channel was selected by 29 thousand netizens. The only domestic brand ranked before Hongxing Erke was Lining's. But Hongxing Erke is only in ninth place, and there are 7 foreign brands in front.

"Whether Anta, PEAK or Hongxing Erke, they are looking at the domestic first-line market." Liao Jierong, an independent analyst in the apparel industry, said that consumers in the front-line market are much more demanding on the brand and more critical in quality.

　　 Dilated tempo too late dyspepsia?

In Liao Jierong's view, Hongxing Erke's development mode and brand positioning are all right. The problem of performance decline is mainly on the pace of expansion. According to the public information of Hongxing Erke, at the end of 2009, there were about 4003 retail outlets in Hongxing Erke, while the number at the end of 2008 was 3824, with an increase of only 179, far slower than that of other major sporting goods brands in other countries. This year, Hongxing Erke's shop speed has not improved significantly. In the first quarter, only 27 new stores were opened, and less than 2009 of the new stores 1/6.

In the apparel industry, the size and speed of opening stores depend on the amount of money, and the decline of Hongxing Erke naturally affects the investment on the store. In the earnings report, Hongxing Erke's explanation for the decline in performance is the weakening of domestic market demand. In addition, the overstock of dealers has led Hongxing Erke to reduce the price of the dealer's delivery so that the dealer can digest the inventory. People close to Hongxing Erke told reporters that in the past few years, after the success of IPO, the expansion of the shop was fast, and a lot of money was spent on brand promotion, even without cost. This leads to the opening of shops now, and has to "eat vegetables".