The Profit Margins Of The Sporting Goods Industry Will Be Squeezed.

Recently, due to the double digit decline in the annual order volume in 2012, the Li Ning Co, the leading domestic clothing brand, issued a performance warning. It is expected that the first half and full year profits will fall sharply.

This is only domestic.

Brand performance "bright red light" iceberg.

Red light for orders

Recently, Lining 2012 year-end orders will end, as a result, Li Ning Co in the fourth quarter of the order amount double digit decline.

Among them, the order amount and average retail price of footwear products showed double-digit decline.

Clothing products, the amount of orders fell more than 20%, clothing average retail price and order volume fell.

From the results of the order meeting, Li Ning Co's annual orders may drop by nearly 10% compared with last year.

The amount of orders fell not only by Lining, but also by Anta.

And other sports brands.

It is reported that in the first quarter of this year, the order of Anta increased by 15%, but in the third and fourth quarters this year, the amount of orders fell sharply.

PEAK's orders for the fourth quarter of this year will drop more than 20% of footwear and clothing products. Therefore, PEAK expects that the number of stores will be reduced by 10% to 7000 by the end of this year.

Insiders pointed out that when the situation of larger inventory has not changed, this year's orders can be expected that this year's sports brand competition will become more and more intense. The retail sales promotion of clothing brand will be intensified.

The profit margins of the entire industry will be squeezed by the rising impact of marketing, labor and other costs.

Li Ning Co is affected by the amount and duration of CBA sponsorship contract, and the cost of brand marketing and promotion will increase considerably.

It is expected that the pre tax profit and net profit will decrease considerably in the first half of this year and the whole year.

Lei Xiaoshan, a China market research group, believes that when profits are squeezed, excellent brands can pass on the rising cost to the end consumers, but Lining can not do so.

In order to enhance its popularity in the post-90s, in July 2010,

The company began to use new brand identities and slogans.

But the new generation of post-90s did not show any special recognition of Lining's brand.

As a result, the order quantity of Lining's clothing products and shoes products dropped by more than 7% and 8% respectively in the second quarter of 2011, and the total amount of orders decreased by about 6% compared with the same period last year.

This year's ordering will be cold, mainly affected by the downturn in the industry.

At present, Lining is in the middle of sports brand. The low end of sports brand has competitors like Anta, PEAK and 361, while Adidas and Nike snipe at the high end.

Lining urgently needs to expand brand awareness among young people and enhance the overall brand value.

Industry is cold

It is reported that from the beginning of this year, the 2011 financial reports issued by the major sporting goods manufacturers in China can see that there has been a general decline in performance.

Speed adjustment has become the common aspiration of major sporting goods companies.

Last year, Li Ning Co's sales revenue was 8 billion 929 million yuan, compared with last year's sales of 9 billion 479 million yuan, its sales revenue declined by 5.8%, net profit 386 million yuan, a sharp decrease of 65.16%.

The stock of Li Ning Co was 1 billion 133 million yuan, up 40.57% from the 806 million yuan a year earlier.

Compared with Lining's operating income, 25 million of Anta group last year was 8 billion 904 million yuan, an increase of 20.20% over 2010. Net profit reached 1 billion 730 million yuan, up 11.50%.

At present, the domestic sporting goods market is weak, the inventory pressure is high, the domestic sports brand performance is generally not good, and Nike and Adidas strengthen the layout of the two or three line market, squeezing the domestic brand market space.

The value of Nike's orders in North America and emerging markets increased by 22% last year.

Adidas's revenue last year was 13 billion 344 million euros, an increase of 13% over the same period last year, and its profit per share grew by 18% over the same period last year, a record high.

In the first quarter of this year, Adidas's sales in China increased by 26%.

Anta CEO Ding Shizhong believes that the market of China's sports apparel market is large, but the proportion of per capita expenditure and sales in clothing is obviously low. The domestic sports apparel brand has increased rapidly for nearly twenty years. It is normal to enter the industry adjustment period this year.

With the acceleration of competition in the industry, some enterprises may be eliminated, which will lead to the strengthening of brand concentration. After the digestion period in China, there are still many opportunities for the development of domestic sports brands.

It is reported that domestic sports brands have developed rapidly in recent years. At present, the share of several major sports brands in the domestic market has surpassed international brands.

In addition to Nike and Adidas, the market share of international brands has hardly risen, and domestic consumers' acceptance of local brands is getting higher and higher.

In recent years, the rapid growth of domestic sports brands, the increase in the number of stores has almost become a "magic weapon" for many manufacturers to increase sales or profits. Now the growth rate of stores has begun to slow down, and the contribution to performance has begun to be weak.

Lining, Anta, PEAK, and 361 all slowed down the rapid expansion of stores.

They have been pforming "distributors" or strengthening cooperation with e-commerce enterprises.

Anta has changed its original wholesaler and franchisee order to take all single store orders, strengthen terminal management of franchisee shops, implement IT integration project, rely on IT system, Anta should improve the reaction speed of service dealers, and improve replenishment mechanism.

Lining, through improving procurement and supply chain management, cut costs, and strengthened the influence of core brands among young people through brand marketing and promotion.