Can Lining Return To His Former Dominance?

As a leading brand of local sports, Lining's performance in recent years seems to be more and more difficult to support 02331.HK.

"The decline of Lining's performance comes from the instability of strategy," said Ceng Yanling, a researcher at the third tier financial Hong Kong stock market. "Lining's implementation of the form of manager management has changed constantly in the market positioning, advertising expenditure has remained high, and the failure to control costs effectively is the main reason for the decline of its performance."

Five years ago, the leading position of local sports brands was not Lining's. In recent years, ANTA Sports Products Limited (02020.HK), 360 degree (01361.HK), XTEP International (01368.HK), PEAK Sports (01968.HK), EDS.NASDAQ and other local brands become stronger and bigger. Lining's leading position in the domestic sports brand is constantly challenged.

The 2011 earnings report disclosed by various companies showed that Anta's turnover was 8 billion 905 million yuan, the turnover of XTEP was 5 billion 569 million yuan, XTEP's turnover was 5 billion 540 million yuan, and PEAK's turnover was 4 billion 650 million yuan.

Anta has grown into a company that is equal to Lining in just a few years. As early as last September, the "2011 China brand value list" selected by Interbrand, the internationally renowned brand strategy consultancy, ranked Anta as the highest ranking local sports brand. In the past, this distinction still belonged to Lining.

Ceng Yanling told this newspaper that from the perspective of development strategy, Anta's strategy is indeed superior to that of Lining. "Anta is more effective in cost control, and it has locked in the middle end consumer groups in advertising positioning, has a higher market share, clearer strategic development and higher advertising efficiency."

Lining's relative passive situation is due to management's erroneous decision-making. Ceng Yanling said: "Lining's management once thought that the future growth of leisure sports apparel industry is slowing down. This wrong judgment has led the management not to focus on the development of brand strategy and finally to pursue short-term interests."

Analysts believe that Lining and Anta products are not much different, it can be said that who has the advantage in cost control, who is more likely to take the lead. Once Lining's market share begins to fall, other brands, including kappa and 360, will benefit. Ceng Yanling said: "Lining's series of erroneous decisions lead to greater possibility of Anta gaining greater market share in the future."

In 2010, Lining carried out radical remodeling of the brand, and changed the business philosophy to the corporate logo. He also entered the US market by working with Champs, a well-known sports product retailer.

However, these efforts have not been rewarded in reality. Whether the consumers are not buying or the competition between sports brands is too fierce, the future of Lining seems to be full of frustrations.

Ceng Yanling believes that part of the decline in corporate performance in 2011 came from the decline in market share, partly from the pressure of rising costs. These pressures also exist in the market in 2012, but if management can improve these two points, it is estimated that the situation can be reversed.

By the end of 2011, Lining had set up 8255 retail stores and a net increase of 340 in 2011. Are these new stores the driving force for growth this year or the pressure on the company's operating costs? Is the company's retail channel layout reasonable?

Analysts believe that the increase in market share can be improved through the increase in sales channels, but not necessarily increase sales channels can bring about growth in performance, new store opening investment is relatively large, so the short-term pressure brought more.

From the industry data that has been disclosed, the industrial structure of the local sports brand is becoming more and more stable: the top two of Anta and Lining, whose annual income approximating tens of billions, belong to the first tier; XTEP, PEAK, and 360 degrees belong to the second tier; the third tier third brands are hard to grow.

Analysts believe that today's sports industry is on the eve of change. From the experience of foreign countries, after 2000, in the highly competitive North American market, Nike acquired CONVERSE and Adidas bought Reebok, which basically laid the industry pattern of the top two in the global market today. Since then, Nike and Adidas have made radical efforts to transform CONVERSE and Reebok from CONVERSE, and retain only a few professional and functional sports products to a slightly lower and middle market, while the overall brand is changing to the direction of sports and leisure.