2011 Sports Brand Inventory Facing Repurchase Pressure

2011 is a year full of twists and turns for sporting goods stocks. Reporters observed that this year, Lining China trend Peak , XTEP 361, and so on, the share price of the company was almost cut short. Data showed that as of December 23rd, Lining's stock price fell by 61.5%, China's trend fell by 60%, PEAK sports dropped 58.8%, XTEP international fell 57%, 361 degrees and Anta performed slightly better, with 44% and 25% respectively.

Since the beginning of December 20, 2011, the Hang Seng Index of Hongkong has fallen by 22.9%, the Hang Seng Index has dropped by 24.5%, and the MSCI China Index has fallen by 22.9%. In other words, most sporting goods stocks failed to win the market.

Channel expansion is too fast.

It is understood that in the first half of this year, Lining's interim profit was 294 million yuan, a year-on-year decrease of 49%. China's first half net profit fell 71% in the first half of the year, while Anta sports profit grew 22% over the same period. In addition, the net profit of 361 degrees increased 30% over the same period. Judging from the data, despite the uneven performance, stock prices are generally sold, showing that performance is not the only factor affecting stock prices.

The industry believes that the rapid expansion of the channel, inventory problems highlighted and intensified competition with international brands, is the main reason for the above phenomenon.

According to China Merchants Securities report, there are about 8680 shops in men's clothing companies listed in A shares and Hongkong market in 2010. In the same period, the size of sporting goods market is only 1/2 of men's clothing, but the number of shops is about 57890, which is 5.7 times that of men's clothing companies.

2010 is the "expansion period" for domestic sporting goods enterprises. The top three or four enterprises have almost broken through the 7000 pass at the same time. The rapid expansion of the channel in the rapid increase in sales of enterprises, but also makes the industry have to face the conflict from the channel.

Lining first felt this change, and began to cut some dealers with poor performance in 2010, while increasing the proportion of direct operations. Anta, XTEP, PEAK and so on have also slowed down the pace of opening new stores. Public information shows that the number of PEAK stores will increase sharply in 2012. Next year, 700 stores will be opened, but some stores will be closed at the same time. The number will be around 500.

Inventory facing repurchase pressure

In fact, the rapid expansion channels also brought high inventory nightmare for Lining, China trend, XTEP and other enterprises. Public information shows that in the first half of the year, Lining's inventory amounted to 992 million yuan, an increase of nearly 200 million yuan. In the first half of, the amount of stock in the first half of the year amounted to 887 million yuan, an increase of 92%, and the average inventory turnover days in the first half increased from 46 days to 81 days.

In order to clean up inventory, Lining actively expanded the discount and clearance channels, announced that it will spend about 300 million yuan this year to redistribute the "unsold products" to the distributors. It is expected that the group will need to repurchase about 1 billion 448 million yuan of inventory in the next two years.

In fact, in the sporting goods business, the book inventory is only part of its actual inventory, and a large part of it has been sold wholesale to dealers but not sold. For the sporting goods enterprises that are still developing new products, if the original inventory can not be effectively cleaned up, a large part of the two thousand or three thousand new additions will continue to become the inventory of enterprises every year. Enterprises will inevitably face the pressure of repurchase and depreciation, resulting in a sharp decline in net profit.

Breakthroughs in breakthroughs

Despite the "cold spell" of sporting goods stocks, the future sports apparel industry is expected to continue to grow at a high level. "Subdivision will become the direction for enterprises to break through." According to the insiders, the outdoor apparel industry has seen a 47% growth rate of compound annual growth of 60%. The total amount of orders in autumn and winter released by the Pathfinder in 2012 was 60% higher than that in 2011.

The international sports brand Adidas and Nike entered the outdoor field a few years ago. Now they have opened independent outdoor stores. Domestic brands such as Lining, Anta, XTEP and so on have also begun to launch outdoor series. Recently, the Thai shoe company, the main shoe material business, also announced that it would cut into the outdoor sportswear field. Expansion in the new field is likely to bring high growth to sporting goods companies.