Sports Brand Discount Strength Unprecedented, Shoe Enterprises Should Seek Opportunity To Change "Do Not Change Not Disturb"

Headed by Lining, ranking the top Sports goods At the ordering meeting, manufacturers announced information on the price increase of shoes and clothing, including Anta, XTEP, PEAK and 361 degrees. Once the news came out, consumers and people in the industry were in an uproar, questioning the "what kind of cost increase should let consumers pay", which made the sales volume of these sporting goods more variable in the future.

For the general public, apart from the stock falls, it seems difficult to find things that do not raise prices. Nowadays, sporting goods manufacturers are also riding the "east wind" of the "rising price". Among them, Lining claims that in the fourth quarter, the price of shoes will increase by 7.8%, and clothing will increase by 17.9% overall, while the sports shoes and garments of the above mentioned enterprises in Jinjiang will increase by 20% to one. The price increase is less than three months from the collective price rise of the last five famous sports brands in China.

Now the situation has changed.

　　 Severe inventory situation in the first three quarters of the industry

1-4 months of this year, Quanzhou The order of export enterprises is very bad, the order decline is very fast, especially since April, some enterprises can only receive some sporadic small orders, many enterprises have not even received an order, and enterprises have encountered "no rice pot" dilemma. Due to the impact of the European debt crisis, some enterprises in Quanzhou exported to Europe, and the unit price fell by 20%.

Prior to this, in the 2011 earnings report of Anta listed companies such as Anta, PEAK, 361 degrees, XTEP and other listed companies, the "inventory" problem began to highlight. "First and second tier brands can also be used to clean up inventory through discount sales. For small brands living in three or four lines or even without fame, even if they are severely discounted, the advantage is not obvious." A small town in Chen Dai Town, Jinjiang Shoes and clothing Chen Laisheng, the head of the company, said that in the face of the 66% off preferential activities of the first and second tier brands, some local SMEs had to offer a clearance price of even 90 percent off.

Olympic year marketing has to be mentioned. Lining lost to Adidas in 2008 and lost to Anta in 2012. If the international sports giants such as Adidas were excused, the Li Ning Co lost to "little brother" Anta, not lack of ability, but willpower.

In the first half of this year, the order amount of Li Ning Co shoes products showed a double-digit decline year by year, and the annual decline of clothing products was more than 20%. So far, Li Ning Co's net profit has dropped to the end of the five mainland sporting goods companies listed in Hong Kong. Jin Zhenjun believes that the current sporting goods market is only short term supply exceeding demand, inventory and terminal sales in the short term is not ideal.

At the same time, it is not just Lining who has encountered such a problem that all sports footwear brands can hardly escape.

Many consumers find that this year, the discount of sports brand is almost unprecedented, and the discount has almost become the norm. For example, Adidas has seen a rare "full half off" sales. With such a large discount, it is easy to see that the pressure of brand inventory is enormous. According to the figures published in the Chinese newspaper, the stock cycle and receivables cycle of the 6 major sports brands all increased compared with the same period last year, of which 4 of the stock cycle has risen to 3 months, which has never been seen in the past. All brands are reducing orders, closing stores and increasing sales promotion, but this will inevitably lead to a decline in overall revenue and profit margins.

Because of the high cost of human labor, Adidas has crossed a meteor in the "made in China" halo to shut down factories directly under China: the advantages of Chinese made by the Chinese have gone away. Guangdong shoe enterprises "collapse tide" and "horse racing enclosure" and so on, because the high rent has already made the low income foundry enterprises have no way to go.

The impact of the economic environment on sports brand growth is weak. At present, with the slowdown of domestic economic growth and the increase of store rentals and labor costs, many sports brands at home and abroad are invariably plunged into "high inventory".

The fourth quarter report released by Nike showed that as of May 31, 2012, the total sales revenue of the Greater China region, the second largest market in Nike, was 667 million US dollars, down 3.89% compared to the third quarter. But the size of inventories has increased significantly. By the end of May 2012, inventories were up to US $3 billion 350 million, an increase of more than 23% compared with us $2 billion 720 million in the same period last year.

BELLE International (01880.HK) and Baosheng International (03813.HK) are the main distributors of Nike and Adidas in Greater China. Two previously released 2012 annual reports have mentioned that the inventory pressure of sports category is very large and there is an upward trend. Bad performance has also greatly reduced the share prices of various sports brands. Less than half a year, Anta, Lining, 361o and China's trend share prices were all cut short. XTEP and PEAK also fell by more than 40%. The whole sector has lost all its share in the market.

High inventory, high cost and low selling price have become the biggest bottleneck for the 2012 sports brand industry to break through.

　 The trend of warming up in the fourth quarter is still not obvious.

The discount began at the beginning of the year, and it was still on sale at the end of the year. Inventory products should be discounted, in order to withdraw and fund. Then what is the new listing of shoes and clothes for the new season?

Compared with the strong growth of women's shoes, children's shoes, mountaineering shoes and casual shoes, the sports footwear market is a pattern that separates the male and the female. This year, it really can't afford to hurt. Since May, even the new products listed, Nike, ADI and other brands are also selling at twenty percent off ten percent off, and some footwear products even have a lower discount. According to China Customs Hui Dian research statistics, in September 2012, the value of China's footwear exports amounted to US $4255449. Since entering October, online shopping shoes have also opened up price wars: 3 folded special price, the audience as low as 80 percent off, every day special. This year, because of the weather, the temperature dropped a lot from that of the same period last year. Recently, a strong cold air will start from Xinjiang, from west to East, from north to south, affecting most parts of China. It is fair to say that the new listing is supposed to be a rise in shelf life, but the "discount" is still common with the expectation. It is the consensus of the industry to seize the market and earn money without making money.

The rainy season began in Beijing in October. A cold autumn rain. The supermarket's winter clothing has been listed, but the distinction between listing is obvious: the original price is 65, the current price is 45, the original price is 189, the current price is 79. Winter clothing and down garments are still on sale. The department stores responsible person said that with the advent of new autumn clothing, only some of the clothing prices rose. Most of the prices were flat or even lower than last year. It seems that inventory cleaning really needs a lot of patience.

What about the sports shoes industry? Data show that in the first half of, except for the slight rise in XTEP's revenue, Anta fell by 11.6% compared with the same period last year, 361 degrees down 10% compared with the same period last year, PEAK's decrease by 28.5% compared with the same period last year, and China's trend fell by 29.4% compared with the same period last year, while net profit fell by more than 80%. The sharp decline in performance is closely related to huge inventory. Inventory clearing is a fundamental problem to be solved.

On the other hand, we can see from the published order meeting in the first quarter of 2013 that the order amount of Anta has been reduced by 20%~30%, XTEP has also decreased by 15%~20%, and the amount of clothing orders of PEAK has also declined.

With this year, Li Ning Co has been closed shop, issued a profit warning, high level exchange transfusion, and from high inventory, 4 years down to 76% of the market value, Goldman Sachs abandoned, declining orders, etc., all kinds of problems are reported repeatedly. The only store in Hongkong that was closed recently. Up to now, Li Ning Co's product orders will also be released on children's clothing, and announced in August that it will no longer publish reference data for product orders.

In August 6th, Anta released the announcement of the first quarter of 2013 and the growth of the same store sales in the first half of 2012. It shows that the Quarterly Orders in the first quarter of 2013 will show: as the earlier announcement indicates, the competition in the domestic sporting goods industry continues to be fierce. After careful adjustment, coupled with the new wholesale discount policy adopted by the group from 2013 orders, the order volume of the group's first order meeting in July (at wholesale value) fell by about 20% to 30% in the first quarter of July.

PEAK 2013 first quarter product orders, footwear orders growth rate is the positive low single digit, the average wholesale price growth rate, for the low single digit.

The 2013 product order meeting will continue to be a difficult year for local sports brands. 2012 of the fourth quarter has passed half of the "golden nine silver ten" season is also about to end. In the first two months, the basic sports shoes industry basically did not rebound. In the fourth quarter, despite the trend of rising prices for new shoes in autumn and winter, but for sports shoes, it is still unable to break through the shadow of inventory. 361 degree Zhu Chenye said that the slow growth of new products and the annual growth rate of 20%-30% after local sports brands returned to 2008 were unrealistic. For fast fading brands, once the inventory is high, it means that the situation is grim. At present, there are still no indications that the stock of brands has bottomed out. It is estimated that the inventory will be long in the fourth quarter of this year.

　　 Shoe enterprises should seek opportunities to change "do not change not disturb".

At present, the current situation of the huge sports shoes market is: high cost - high inventory - low price - short capital - clear inventory - poor technology. This seems to be another curse that can not be passed away. In the face of high inventory, the industry's analysis is caused by vicious competition among enterprises in the industry. There is no smoke without fire. Such a big loss, vicious competition is to blame. Faced with all kinds of difficulties, how should entrepreneurs in the shoemaking industry face the development of the next two months? It is a matter for us to think about this opportunity and find the biggest harvest this year.

I have to mention again the "big brother" of Chinese national brand -- Lining. In the face of various doubts in the industry, in the face of various changes within the group, Lining's efforts in the industry caused a lot of rain and wind. But in a short month, Lining changed from the bottom to the bottom: signing with Wade, sponsoring NBA, investing heavily in sports business, and of course, there were people in the industry who analyzed Lining's move, but I did not think so. It is precisely because of such a quiet spirit, if the spirit of the rabbit has made the former brilliant Lining, today's investment is not the most appropriate way and the best opportunity to save Lining. For Wade's new war boots, for the constantly launched new products, Lining has been in front of the shoe companies that are fighting for price wars. It also ushered in a new development for Li Ning Co. Taking the initiative is the first step to success.

The development of shoe industry in recent years makes the characteristics of fast moving products more and more obvious. The design and development of new products has become the most effective magic weapon and profitable capital. Why is Nike and Adidas able to dominate in the global sports shoes market? An indisputable fact is that they are always innovating and always see the announcement and listing of new products. In fact, only by putting 50% capital and time of vicious competition into product design and research, can we win the opportunity of signing Lining and Wade.

In this fickle society everywhere, as part of the social product, innovation changes the future and opportunities change the status quo. Lining's chance to succeed in the end of this year will be the same for all the shoe makers. Q4's breakthrough is also full of variables. No one will win the battle until the last moment.