Sports Brand Performance Decline Industry Aimed At Inventory

In August 7, 2012,

Sports published in 2012.

Half a month later, XTEP, 361 degrees, PEAK, Lining and other five major sporting goods companies announced their 2012 China Daily.

From the data of China Daily, the turnover of the five major sporting goods brands generally showed a downward trend.

Compared with the same period last year, except for a slight increase in XTEP's turnover, the other major brands' revenues declined.

The industry believes that the sporting goods industry has officially entered a period of adjustment.

Overall decline in performance

Whether it is turnover or profit, the five major sporting goods companies surrendered their pcripts compared with the same period in the previous year.

In terms of turnover, Anta still led by 3 billion 930 million yuan, but it dropped by 11.6% compared with the same period last year.

The turnover of Lining, 361 degree and PEAK, which followed closely, declined by a different margin, and PEAK's turnover decreased by more than 30%.

The five largest sporting goods company, XTEP, whose turnover increased only slightly, rose by 140 million to 2 billion 600 million yuan over the same period last year.

Compared with the decline in turnover, profits have fallen even further.

Data show that Anta net profit dropped 16.85% to 770 million yuan, 361 degree net profit dropped 22.97% to 597 million yuan, PEAK net profit decreased 43.26% to 423 million yuan, and Lining's net profit is more than 80% to 62 million yuan, let a person's tongue.

The only increase in net profit was still XTEP, 0.21% to 467 million yuan.

The impact of this decline will continue.

The company even raised the alarm for the annual loss, which surprised the market.

If the alarm is to come true, it will be the first annual loss of the company, known as Lining, a former gymnast prince, named in Hongkong since June 2004.

Industry enters shuffle period

In fact, the industry has long had a premonition about the downturn in the sporting goods industry in the past six months.

However, this kind of voice has been concealed in the situation of the overall performance of the sporting goods industry in the previous two years.

As an independent critic of the footwear industry, Ma Gang had already thought two years ago that the sporting goods industry was about to enter the industry adjustment period, and that the performance of the whole industry would go down sharply.

However, the voice did not cause much concern at that time.

"Although the performance of several major sporting goods in the past two years seems very good, this good-looking is based on increasing the terminal.

In other words, it's just moving the product from the enterprise to the agent, rather than being bought by the consumer.

This approach, though it will look good in the short term, will not be a solution.

The resulting inventory problem will cause more headaches for businesses.

Ma Gang said.

The semi annual report issued by the six major sporting goods is not brilliant in Magang's eyes.

"The channel has increased to the limit, and everyone has been unable to move the store. Now everyone is going to stock up, but how do we find new growth points? How many kinds of products are there, such as 361 degree children's clothing, an increase of 191%? Or PEAK's internationalization? Overseas income has dropped by 15.8%? Or is XTEP's product structural pformation? From board shoes to running shoes? We can only say that everyone is trying."

This year, China sports products Federation released the "2010-2011 development report on China sporting goods industry", also pointed out that the sporting goods industry will usher in a comprehensive shuffle stage.

"At present, the first-line brands in the sporting goods industry are expanding to the two or three tier cities, while the two or three line brands are also actively entering the first tier cities. The crossover of all kinds of brand markets is bound to intensify the competition in the industry.

At the same time, inventory, cost and other problems will also speed up the survival of the fittest in the industry.

Ma Jilong, vice president and Secretary General of China sports products Federation, said.

This competition first appeared on the terminal, and the reshuffle of the terminal market was launched in the number of Brand Company stores.

Lining and PEAK both shut down terminal stores sharply, while Anta, 361 degree and XTEP's terminal stores increased slightly, but the growth rate was not large. XTEP only increased 7 terminals.

This contrasts sharply with the hundreds of thousands of terminals and high-profile claims that have entered the "Wan shop era" a year ago.

"The cost of store rent is getting higher and higher, which corresponds to the decline of single store sales performance.

Under such circumstances, several brands will be more cautious and comprehensive when they open their stores.

Now they will pay more attention to the benefits of single store. "

Some people in the industry use this sentence to explain the underlying causes of this change.

"Due to the rapid development of the industry over the past few years, enterprises are generally optimistic about market expectations, overinvestment in the whole industry, and oversupply of products."

The key is Zhang Qingru, the founder of sports consulting company.

Admittedly, the issue of product homogeneity and low brand value has always been criticized by local enterprises.

However, with the advantages of cost and channel, local enterprises have been able to take a place in the market.

In Zhang Qing's view, all the problems that appear in the industry today are not the coolness of the "investment surplus" is the most direct fuse.

"The sports industry is a futures system, and enterprises are very important for future market judgement. If we want to increase our expectations and increase output and expand our channels, we will not be able to keep up with sales because of various factors, which will be followed by recession and adjustment."

Difficult way to inventory

People in the industry have joked that even if all garment enterprises in China stop production now, only the backlog goods in the warehouse can be sold to the domestic clothing sales enterprises for at least 3 years.

The seriousness of inventory backlog problem in footwear industry is evident.

For several major sporting goods brands, inventory will become the focus of their work in the next two or three years.

According to the China Daily, the stock of Li Ning Co, Anta and PEAK is still rising. As at the end of June, they were 1 billion 138 million yuan, 628 million yuan and 529 million yuan respectively, while XTEP and 361 degrees decreased to 701 million yuan and 366 million yuan respectively.

To add insult to injury, in the first half of the year, the average inventory turnover days of all companies were rising, of which PEAK rose from 49 days in the first half of last year to 86 days.

Obviously, the road to inventory is still long.

Since the beginning of 2011, the inventory crisis of local sporting goods brands has attracted wide attention.

Recently, one of the most striking reports is that in the global competition, Chinese sports industry such as Li Ning Co, in order to avoid the attack of Nike and Adidas, give up high-end products and attack the middle end consumption of China's middle class.

As a matter of fact, going to stock has become a more brutal sport event than the Olympic Games.

Xu Zhihua, chief executive, admitted that there is no big improvement in the second half of this year. PEAK's priority now is to clear inventories.

According to Xu Zhihua, PEAK offers 61% off discount to retailers, which is lower than the previous 60 percent off, leading to a decrease in gross margin and gross profit margin.

But at present, PEAK is also considering further increasing the discount of terminals. It is expected that gross margins will drop further. At the same time, it is expected that the inventory will not be effective until the first and second quarter of next year.

Xu Zhihua said that his concern now is whether sales will pick up in the second half of next year, and if they pick up, it may be the signal of the industry's bottom up.

At the moment, PEAK is planning to pfer its inventory to overseas sales.

PEAK plans to sell its inventory overseas, while XTEP and Lining consider reducing orders.

In the first quarter of 2013, the sales order volume of XTEP in the first quarter (at wholesale price) fell by about 15% to 20% compared to the same period this year. Meanwhile, the wholesale discounts offered to distributors will be adjusted from 60% of the proposed retail price this year to 62% of the proposed retail price.

"Inventory is still a big problem for quite some time," Ma Gang pointed out. In the future, the sporting goods market will be further concentrated, and some brands will be faced with pformation, cutting into market segments or switching to other fields.