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Inventory Pressure Makes Sports Brand Sink Into Development Dilemma

2013/1/22 9:00:00 17

Inventory Sports Brand Sports Brand Market

after maintaining the high-speed growth for several years, the growth rate of domestic a href= "http://www.91se91.com/news/index_c.asp" > sports brand < /a > began to decline rapidly and showed signs of saturation. The past development mode is no longer suitable for the future development of enterprises.

in the Chinese market in 2012, whether the performance of Nike (stores) shrinks, or Lining's (boutique), PEAK and other domestic brands and high inventory, all concentrated on the development trend of sports brand industry.

Nike pressure /p >

recently, Nike's earnings report showed that after the first quarter net profit fell 12%, the net income of Nike in the second quarter of fiscal 2013 dropped 18% to 384 million US dollars again.

Among them, the Chinese market with a sales volume of 577 million yuan has dragged down its performance in the global market, with a drop of 11%, ranking first in its global market.

While the decline in performance, its inventory burden is getting heavier and heavier.

As of May 2012, Nike's inventory reached 3 billion 350 million US dollars, compared with 2 billion 715 million US dollars in the same period in 2011, an increase of 23.39%.

in the past 2012, after announcing the sale of its brand Umbro (UMBRO) for 225 million dollars, Nike plans to separate its "a href=" http://www.91se91.com/ "target=" _blank "shoes" /a "package brand Cole Haan".

According to foreign media reports, Nike intends to sell its brand Cole Haan for $500 million to Apax Partners., a private equity fund company. At present, the two sides have entered the final stage of negotiations.

Before P, Nike has shut down its sole shoe factory in China. It has stopped placing orders for many sportswear factories in Asia, and has stopped working with several Asian a href= "http://www.91se91.com/" target= "_blank" > clothing /a plant.

Nike's series of "downsizing" actions sparked industry attention, selling UMBRO and Cole Haan, and so on, helping to concentrate resources on core brands.

But at the same time, it has gradually lost the space to pform into fashion and leisure.

Ma Gang, a sports brand analyst, said Nike's total sales in China last fiscal year totaled $2 billion 500 million, accounting for more than 10%. of its total sales of $24 billion 100 million. According to investment bank estimates, the Chinese market contributed 30% of Nike's operating profit to Nike.

Therefore, the performance of the Chinese market has been declining, which is hard for Nike to accept.

it is learnt that the high inventory that Nike is facing is a common problem in the current Chinese sports brands. In 2012, the order and sales revenue of Nike declined sharply.

it is reported that in the fourth quarter of fiscal year 2012, the total sales revenue of Nike Greater China, including footwear, a href= "http://www.91se91.com/" target= "_blank", clothing, /a and accessories, amounted to US $667 million, compared with the third quarter. The Morgan Stanley report showed that in the fourth quarter of fiscal 2012, Nike's global orders growth slowed from 18% to 12%, and China's order growth dropped from 20% to 2%.

strong > how many "Nike" is struggling? /p >

P, Nike's global competitor, Adidas suffered a long period of pain in 2008 because of its high inventory.

At that time, Adidas began to strengthen cooperation with distributors, not only allowing dealers to open discount stores, but also allowing dealers to sell products in a certain proportion of old and new terminals.

At the same time, it is dispatched to the dealers to supervise stores and work with distributors to tide over the crisis.

After 2011, Adidas's performance has begun to recover and its growth has been maintained in 2012.

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recently, the Li Ning Co, the domestic sports giant, released the announcement that it expected to make a big loss in 2012. This is the first time that Li Ning Co has expected to make a big loss since its listing in June 2004 for 8 years.

The board of directors explained why the loss was due to a one-time cost involved in the change plan, including the channel revival plan.

The channel revival plan needs a one-time budget support of RMB 1 billion 400 million ~18 billion, which will involve accounting and inventory provision and provision for bad debts.

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it is understood that the main factor of Li Ning Co's high inventory comes from the overestimation of the consumer market after the 2008 Olympic Games.

After Li Ning Co's expansion, it has tasted the bitter fruit of closing stores and clearing stock.

Relevant data show that over the past decade or more, Li Ning Co has rapidly expanded its marketing network through wholesale operation, occupying market share and grabbing the first round of development opportunities.

Between 2004 and 2008, Lining's store increased from 2272 to 5935, and its income increased from 1 billion 878 million yuan to 6 billion 690 million yuan.

2009 to 2010, Li Ning Co realized operating profit of 1 billion 342 million yuan and 1 billion 547 million yuan respectively, and dropped to 631 million yuan in 2011, far lower than 960 million yuan in 2008.

By the first half of 2012, the company's operating profit was only 184 million.

In the past two years, Li Ning Co's brand pformation failed, with its sequelae prominent, and high inventory. Goldman Sachs quit.

Since then, the company has launched a series of self rescue actions: shutting down stores, layoffs and downsizing, introducing new investors, major management groups, and so on.

from the Li Ning Co's earnings report, as of June last year, Lining's stock has reached 1 billion 138 million yuan, and from the accounts receivable, the inventory in the dealer chain is up to 2 billion 500 million yuan, and the two additivity is almost equal to 3 billion 830 million yuan in the same period.

If the huge inventory generated by the failure of the pformation in 2010 can not be solved by the end of the year, the whole distribution channel of Li Ning Co may be dragged down by huge accounts receivable, and its sales plan for the new year will also be affected.

Once the dealers are forced to start their own inventory operations under the pressure of repayment, the brand and the whole price system of Li Ning Co will be shaken.

it is reported that Lining dealers are facing high inventory at this stage and unable to pay the company's debts.

In sports shoes and apparel industry, the return period of trade between Brand Company and dealers is usually 90 days, that is, the 90 days after the delivery of the distributor, the total amount of the goods is paid.

Li Ning Co's data show that the turnover of accounts receivable has increased from an average of 52 days in 2010 to 102 days in the first quarter of 2012.

"P" is subject to high storage pressure. At the Li Ning Co product order, in addition to the increase in the number of units in the two quarter of 2011, the order amount, price and quantity of the whole product are declining.

It is reported that Li Ning Co orders were more severe in the fourth quarter of last year, and the number of orders was double digits.

Among them, the order amount and order quantity of shoes products were down double digits, and the average retail price dropped by no more than 5%. < a href= "http://www.91se91.com/" target= "_blank" > clothing < /a > the order amount and order quantity of the products decreased by more than 20%, and the average retail price also declined.

now Nike and Lining have high inventory and order decline is just a microcosm of the deterioration of the operation of the whole sports apparel industry.

From the international brand Nike to domestic Anta, PEAK and other brands are facing similar problems.

analysts pointed out that the high inventory of domestic sports brands is due to the incomplete development of China's market. For a long time, Brand Company has formed a concept of "wholesale only, regardless of terminal".

And a href= "http://www.91se91.com/news/index_s.asp" > distributor < /a > also lacks training and knowledge in the construction of stores. In the future, it is necessary to establish a sound business model to facilitate the healthy development of the industry.