Leading Brand Profits Increase Steadily, Footwear Products Are Eye-Catching.

March 17th, China

Leading enterprises

The company released its 2015 earnings report. Up to December 31st, its revenue reached 7 billion 89 million yuan (RMB), which rose by 17% compared with 2014. Lining finally ended the three consecutive year of losses.

Previously,

XTEP, 361 degrees, and PEAK four sporting goods brands have released their 2015 earnings report, with their impressive revenue growth and over 20% net profit growth.

This is following the gold blowout period of the sporting goods industry in 2008, the sporting goods industry has entered a new phase of small step and is about to enter the new stage of the development of sports industry.

Looking at the development of sports goods industry, it is easy to find that on the one hand, the warming of the sports industry has brought a positive impact on the sporting goods market. On the other hand, from the perspective of the enterprises themselves, after more than three years of reform and pformation, the clear positioning and the focus of their respective fields, the new channel construction and product structure also usher in a new development for them.

Leading brand profits increase steadily, footwear products are eye-catching.

Lining annual report shows that in 2015, Lining net profit of 14 million 309 thousand yuan, an increase of 101.83% over the same period last year, while its turnaround in profits, retail, wholesale and e-commerce revenues were double-digit growth.

On the other hand, the former "big boss" turned the profit into a profit. On the other hand, the first domestic brand entered the 10 billion club, and a lot of domestic sports brands saw the dawn of recovery.

As one of the traditional sports brands in China, Anta's 2015 annual performance announcement was quite bright, and its business income was the first to break 10 billion yuan. It became the first sporting goods company in China to enter the "billion club".

According to Anta's earnings report, the company's revenue reached a record 11 billion 126 million yuan during the reporting period, up 24.7% from the same period last year, and its gross profit reached 5 billion 185 million yuan, an increase of 28.8% over the same period last year.

Net profit increased by about 20% over the same period last year, reaching 2 billion 40 million yuan.

At the same time, Anta also announced the operation of the physical storefront.

By the end of 2015, the number of Anta and Anta children sporting goods stores and FILA stores was 7031, 1458 and 591 respectively. It is estimated that by the end of 2016, the number of Anta stores will reach 7100, and the number of Anta children sporting goods stores will reach about 1800, and the number of FILA stores will increase to 650.

After Anta and Lining released the warmer signal, the turnover of 360 International Limited increased 14.1% to 4 billion 459 million yuan in 2015 last year.

Gross profit is RMB 1 billion 823 million yuan and gross margin remains stable at 40.9%.

Equity holders should account for an increase of 30.2% to 518 million yuan in profits.

Other well-known brands also performed well, and PEAK sports released its 2015 full year report showing that the company made a profit of 392 million yuan in the 2015 year, an increase of 22.33% over the same period.

In 2015, the annual operating income was 3 billion 107 million yuan, an increase of 9.33% over the same period last year. As of December 31, 2015, XTEP International Holdings Limited's revenue grew by 10.8% to RMB 5 billion 295 million 100 thousand yuan, and gross gross margin rose 1.4 percentage points to 42.2%.

Among them, equity holders should account for an increase of 30.3% to 622 million 600 thousand yuan in profits and a basic profit of 28.97 yuan per share.

It is worth mentioning that for the above sporting goods companies, footwear products account for most of the revenue and profit.

In addition to the 40 million pairs of shoes sold by Anta last year, the income of XTEP's running shoes increased by 7.1% to 3 billion 260 million yuan in 2015; the sales of shoes for 361 degrees increased by 21.3%, while the volume and price increased by 42.3% to 42.3%; PEAK's footwear revenue increased by 16.1%, accounting for 43% of revenue.

It is not difficult to explain why, as the four companies that started with the footwear industry in Quanzhou, footwear products were their strengths and the largest proportion of investment in R & D companies.

In 2015, national fitness began to ferment in China, especially the boom of running competition, which led to the sale of running shoes.

On this basis, various sporting goods companies also seize the opportunity to introduce functional sports shoes and basketball shoes with higher technology content.

These shoes are more professional and more athletic comfort and safety than those used to focus on light sports and casual shoes.

{page_break}

Functional footwear not only helps sporting goods companies further seize the professional sports market, but also brings higher profits.

Among them, XTEP, which was officially pformed from the professional movement of fashion movement last year, is the most obvious. In 2015, XTEP sports function products accounted for about 55% of sales, compared with only about 30% in the past.

The average price of functional running shoes is 20%~30% higher than that of general running shoes, and the gross profit margin is also about 2 percentage points higher, which has promoted XTEP's gross profit margin by 1.4 percentage points.

Last year, there were 53 marathon events registered by the China Track and Field Association, an increase of more than 100% compared with 2014, and the participation rate was close to 45%. The participation rate of Chinese running sports and the demand for functional running shoes continued to increase.

Last year, a year ago, domestic sporting goods companies took part in various marathon races, which directly led to the sale of functional running shoes. For example, in 2015 alone, PEAK launched 1.1 new products, namely, arrow feather, Skywalker, S-PAD, Yue run three generation and rhythm five.

Clear positioning and focused attention.

There is no doubt that with the continuous development of the sports products sales industry, the local sports brand has gradually gone out of the depressed market in recent years, the impact of sales, and even created new myths.

Such changes can not be separated from the clear positioning of each brand and its own development strategy.

In fact, since 2011, Anta has always maintained a high turnover and net profit. By 2015, Anta sports year turnover has been more than ten billion, creating a new record for the sporting goods industry.

This is closely related to the effectiveness of Anta's multi brand strategy.

Anta annual report repeatedly stressed: in 2015, Anta's multi brand strategy achieved initial results. Through Anta, Anta children, FILA, FILA KIDS and NBA, accurate positioning of sports products market segments, covering the public and high-end consumers, successfully realized the complementary differences and maximally met the growing demand of consumers.

Since the establishment of the first national sports science laboratory in 2005, technological innovation has become the biggest driving force for Anta's strong growth.

In 2015, Anta's R & D cost accounted for 5.2% of the cost of sales. R & D accounted for an increase of 0.9% over the previous year, the first in the industry.

At the same time, Anta has greatly enhanced the competitiveness of products by establishing an international R & D team.

Five of its R & D control technology basketball shoes, "Challenge100" professional running shoes are widely praised by the market.

Thanks to the improvement of science and technology, Anta began sponsoring the Chinese Olympic Committee and the five largest centers to enhance market awareness and bring professional sports products to the overwhelming majority of consumers.

Ding Shizhong, chairman and CEO of Anta's board of directors, said Anta will always strive to do every piece of clothing and shoes with the spirit of craftsmen to meet the overall needs of professional athletes and consumers.

In a unique way, Lining promotes business growth by focusing on the three pillars of products, channels and retail operations, focusing on the double digit growth of the five core categories, especially the performance of the basketball category.

Retail flow was up 43% as compared with the same period last year, and retail flow in the quarter and last season increased by 61% more than the same period.

While strengthening the "Internet +" digital business structure, Lining has clearly implemented the sports professional and sports life product strategy, and has deeply explored the market potential of sports life.

In the second half of the year, Lining will launch a series of blue and white "spring marked" sports life series, adding independent shops focusing on mass sports activities, and launching cost-effective products for mass consumer groups to attract fashionable young consumers.

At the same time, the traditional "Lining logo" is parallel with it, specifically for understanding Lining brand traditional sports participants, to provide them with technology and functional innovation of the consumption experience.

In the first half of 2015, the income of Lining's brand products from the business of the electricity supplier accounted for about 6% of the total revenue of the group. The company expects to increase the proportion of the electricity business revenue to over 20% in the next three to five years.

Next, the company will make use of the large amount of consumer data accumulated to make in-depth analysis of their consumption behavior and habits, so as to be more flexible and targeted to integrate into the social and intelligent life of consumers.

{page_break}

The other major sporting goods brands also have their own clear positioning and strategies.

XTEP said in its announcement that the "3+" strategy has benefited from the company's "3+" strategy, that is, in the three aspects of products, sports and Internet, it will push the company's products, sales and after-sales services to a new and higher level.

While PEAK insisted that "specialization and internationalization" development also made it quickly out of the trough, even in the 2012-2014 year PEAK sports performance declined, but PEAK sports has always been the main professional quality, still in the field of basketball shoes in the same industry, the first domestic market share.

This shows that China's sports brand is gradually out of the mire, and is expected to enter a stage of steady growth.

Some leading brands in the industry began to turn to experience consumption oriented business models, and even increased the integration layout of upstream sports industry chain resources.

A new era of gold mining has arrived in the sporting goods industry.

The Chinese sporting goods enterprises, which had been rapidly rising by their production and processing capabilities, entered the development stage of small steps quickly through its clear strategic development strategy.

More open sports industry opportunities

With the continuous promotion of sports related consumption, sports development and sports popularization and participation, the government has injected strong vitality into the sporting goods market.

From investment driven to consumption driven, consumption has become a new driving force for China's economic development.

From the development path of western countries, when people's basic material needs are satisfied, the first demand is health and sports.

According to authoritative organizations, China's sports industry will reach 5 trillion -7 trillion in the next 10 years.

According to Euromonitor statistics, in 2014, the scale of sports goods industry in China was nearly 150 billion. Meanwhile, the scale of sporting goods in the United States accounted for 30% of the sports industry, while China was 70%.

According to the insiders, the data show that the development of the local sporting goods industry, which is in the process of recovery and warming, is huge and has a bright future.

Coupled with the good news of the local sports brand report this year, we believe that the sporting goods industry will be more brilliant in the 2016 Olympic year.

"In this sense, the golden age of China's sports industry has just started, and Anta's billion has just begun."

Ding Shizhong said that Anta will continue to play and use strong brand value, further improve product and brand differentiation, improve retail channel management, and enhance the cost effectiveness and reaction speed of the supply chain, and strengthen its core strengths to maintain leadership in the Chinese sports market, so that the growth momentum can continue.

Similarly, the president of the 360 degree "Ding Wu" said: "at present, in China's economic development stage, the demand for entertainment and entertainment is huge, and the mass movement is entering a more specialized stage.

With the implementation of the reform, the government encourages and stimulates domestic consumption, laying a solid foundation for the sustainable growth of China's sports apparel industry.

We will continue to consolidate multi brand strategy and category segmentation strategy, fully return products to meet users' professional needs and sense of experience.

While making progress in specialization and internationalization, PEAK also has bigger ambitions.

With the strategic development goal of "Internet +", "China made 2025" and the promotion of national fitness as a "national strategy", the increasingly open and increasingly market-oriented sports industry has provided new opportunities for PEAK, a group company that has long been rooted in sports industry.

Roland Begg, partner of management consulting and vice president of Greater China, Chen Ke believes that in the future, professional development, attention to women, pformation of stores, expansion of street shops and technological innovation will become a new growth point for the domestic sporting goods industry.

"Especially the leaders of sporting goods industry, through the experience of the optimization of consumption oriented business mode and the layout of resources integration in sports industry chain, can be prepared for the coming of a new era of nuggets."

Industry sources said.