In The First Half, Domestic Sports Wear Increased By 2%-17.9%

Average increase of 2%-17.9%

As early as June this year, the domestic sports brand "one brother" Lining announced that the average retail price of footwear products will increase by 7.8% in the fourth quarter of this year, and the retail price of clothing products will increase by 17.9%.

Lining's explanation is that the price increase is mainly aimed at enhancing brand positioning and narrowing the distance between pnational sports brands.

If Lining, who has outperformed Adidas to second place in domestic sales, has enough brand support to bear on consumer psychology after raising prices.

So the brand of Anta, which is still dominated by two or three tier cities, has obviously not yet had such a "bottom line".

But several mid - year reports show that they also have plans to raise prices.

XTEP's semi annual report shows that the average selling price of footwear products will increase to 85.7 yuan, an increase of 6.6% over the same period, and the average selling price of clothing products increased to 52.2 yuan, an increase of 13.9% over the same period last year.

Anta's earnings report showed that in the first half of this year, the average selling price of Anta footwear increased by 2% to 96.9 yuan, while the price of clothing products increased by 7.1% to RMB 49.6 yuan.

PEAK (01968.HK) China Daily reported that the group's clothing product average unit price increased by 2.1%, from 42.5 yuan in the first half of 2009 to 43.4 yuan in the same period in 2010.

Combining the situation of the four major sporting goods listed companies, the price increase of their products significantly exceeded that of the domestic CPI (consumer price index) in the first half of the year by 2.6%.

Price rise of raw materials is the main reason.

Behind the "impatient" price increase, the raw materials, manpower and marketing costs that are generally rising in the first half of the year are the main pressure.

After a substantial increase in the price of the products, gross margins did not increase significantly.

For example, Anta's gross profit margin increased by 2.2 percentage points to 43.7%, far below the price increase.

The average price increase of PEAK was the lowest among the four listed companies, but the gross profit margin in the first half of the year fell by 0.4 percentage points to 37.7%.

The biggest price adjustment was XTEP's gross margin, which was 40.7%, up 1.8% from 38.9% last year.

"Now the price of raw materials has gone up very much, which directly leads to the rising cost of clothing. We are the first to be affected."

Jinjiang, a factory responsible for the sports brand OEM at home and abroad, told reporters that the downstream clothing brands also understood this, the demand for products was large, but they could not keep up with the increase of raw materials, so they could only be passed on to consumers.

China's Cotton (information, market) price index shows that the price of standard cotton has risen from the average price of 12831 yuan / ton in 2009 to 18165 yuan / ton in July this year, and 41.5% in the past six months.

This is not just a question of domestic raw materials. Statistics from customs also show that since last October, prices of textile raw materials such as cotton and chemical fiber have also increased to varying degrees.

In addition, the increase in manpower costs is also one of the reasons.

PEAK reported that the group's salaries, wages and other welfare expenses rose from 675 million yuan last year to 1 billion 17 million yuan.

The main reason is not the increase in staff but the rise in average wages.

The game between price increase and brand support

"The foundation of the price increase is enough brand support. Only with enough brand influence, the price increase will not be objectionable to consumers."

Liao Jierong, an apparel industry analyst, said that this year's sporting events are constant, and it is a rare opportunity for domestic sports brands to enhance their brands.

According to Enfodesk's April think tank statistics, the size of the apparel advertising industry's brand online advertising dropped by 12.3% in the month. The proportion of sportswear manufacturers in apparel apparel network advertising decreased sharply compared with the same period last year, while the budget focused more on events such as the world cup and the Asian Games, thus making the size of April apparel apparel online advertising declining.

This means that sporting goods companies are carrying on the pressure of rising raw materials and manpower costs, while they have to "explain" to shareholders, maintain margins and gross margins, and place limited marketing resources to major sporting events.