Sporting Goods Business Bottom Down Under High Inventory Pressure

< p > Lining (franchised store) [-1.84%] Co., Ltd. (02331.HK, hereinafter referred to as Lining) predicts that in the 2012 year it will be the first loss in Listing 8 years, and Anta (franchised) Sporting Goods Co., Ltd. has been listed for the first time in 5 years. The net profit of Peak Sport Products Co Limited has also dropped to its lowest level in nearly five years.

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< p > March 11th, PEAK released the annual report in 2012: last year's revenue was 2 billion 900 million yuan, up 37.5% compared with 2011 (310 million), and the net profit was 310 million yuan, down 60% compared to the same period last year.

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< p > since the beginning of 2011, local sporting goods brands are facing a stock crisis. The outside world is extremely concerned about the inventory situation of the relevant enterprises.

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< p > according to the press release issued by PEAK yesterday, PEAK inventories dropped to 390 million yuan by the end of last year, down 26.9% from 530 million yuan in the middle of last year.

PEAK CEO Xu Zhihua said PEAK's inventory dropped for the first time in the industry, "this is a positive sign that the sporting goods industry is getting warmer."

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< p > however, in the view of the industry, it is now concluded that "warming up" is too optimistic.

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< p > "it can only be said that the whole industry is indeed at the bottom of the valley, but there are no signs of recovery. In 2013, the industry will still be consolidated at low levels."

Zhang Qing, chief executive of sports marketing expert and key Road Sports Consulting Co. Ltd., said yesterday that it is difficult to judge whether the performance of sporting goods companies in 2013 will be better than that in 2012.

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< p > in fact, the price war of sporting goods industry is getting hotter and hotter, and the road to inventory is doomed to be uneven.

According to CNR reported in March 9th, from Lining, PEAK, Anta to Puma, kappa, a month ago, sports brands at home and abroad ushered in a huge discount.

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Less than P, foreign brands are also joining the stock market.

This year, Nike plans to open 40 to 50 special discount factory stores, far more than before.

Nike's newly opened factory store will expand from the first line to the two or three line market, and the discount will be maintained at 3 to 60 percent off.

In the previous second quarter (November 30, 2012) performance report, Nike's turnover in China dropped by 11% to $577 million.

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Compared with Nike, Adidas's sales in China increased by 12% in the fourth quarter of last year and increased by 27% over the past year, compared with P.

However, Zhang Qing believes that this does not mean that Adidas does not have inventory problems. "Adidas's growth is benefited from its adjustment from 2008 to -2009."

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The P price war can partly explain why PEAK's net profit has dropped sharply while its inventory is decreasing.

According to the annual report, PEAK's net profit margin in 2012 was 10.7%, and in 2011, 2010 and 2009, it was 16.7%, 19.4% and 20.3% respectively.

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< p > PEAK announced yesterday that the company will no longer announce the order results since the third quarter of this year.

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< p > in addition to changing the order mode, the number of retail outlets in PEAK last year has decreased by 1323.

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< p > by the end of 2012, the number of PEAK retail outlets was 6483.

Xu Zhihua said yesterday that it will further adjust and hope to maintain around 6000.

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