The Once Existing Scenery Of Kappa Is Fading Away. What'S The Magic Of New CEO?

Was Zhang Zhiyong in the first half of this year to usher in the new year of Kappa recovery?

When the 2018 Russian World Cup ignited the passion of global fans, sports goods stocks in the capital market quietly crept up. The Hong Kong stock market has always been a "lucky place" for sports stocks. Many companies such as Lining, Anta, and 31st degree have chosen IPO in Hong Kong, and China's main brand is Kappa (03818-HK). China's trend has been recovering after a series of difficulties. In October of last year, Lining was able to join Zhang Zhiyong.

Double profits and profits

In 2010 -2012, the entire sporting goods. industry In the event of turbulence, the Kappa brand is no exception. Before 2010, China's revenue and net profit were stable at 4 billion yuan, but it dropped rapidly in 2011. The revenue was cut by 2 billion 742 million yuan, and the net profit was 93.02%. Then, now slowly revived. The 2017 annual report, released in March, shows that China's trend is facing an embarrassing situation of double profit margins.

Figure: China's 2013-2017 year performance unit: million yuan

In 2017, China recorded a revenue of 1 billion 353 million yuan (RMB, the same below), a decrease of 9.91% compared to the same period last year, a gross profit of 753 million yuan, a decrease of 11.79% compared with the same period last year, and a profit of 805 million yuan for the company's equity holders, a decrease of 7.54% over the same period last year. China's trend is that in 2017, the group embarked on a series of effective measures to close down inefficient shops, optimize the location of existing stores, and enhance the overall image of shops. At the same time, in order to further consolidate the control of terminal sales, the group decided to Tianjin Mai Sheng Yuet hop sporting goods Co., Ltd. revenue. By the end of December 2017, the total number of Kappa brand shops in the group was 1487, including 350 children's stores, a net decrease of 76 from the end of last year (a net decrease of 164 in Kappa brand shops, and a 88 increase in Kappa children's shops in December 2017). Among them, the number of self owned and retail outlets operated by Kappa brand through retail subsidiaries is 515. However, the reason for the decline in China's competitiveness is not just in terms of sales.

For the time being, China has only three brands of Kappa, Kappa Kids and outdoor ice and snow brand PHENIX from Japan, and Anta has long been successfully transformed by relying on its excellent retail, supply chain and overseas brand acquisitions, and has secured the position of the industry leader. Lining, the former giant, has also maintained a steady growth trend from the previous great changes to the overdrive. Under the external environment, Nike ADI has strong brand effect and R & D capability. When Anta, Lining, XTEP and other major domestic sports brands are carrying out extensive M & A, the trend has not kept pace with the changes in the industry. Kappa's sense of existence is fading, which forces China to make a decision of transformation.

New CEO led recovery?

Chinese sports apparel industry With fierce competition, consumers have put forward higher requirements for the brand reputation, fashion, technical content and the advantages of subdivision in sports apparel products, and brands are facing more complex challenges than before. Whether or not we can gain a more significant advantage in competition is the key to the sustained growth of China's sports apparel business in the future. This has to mention a key figure, Zhang Zhiyong.

The fate of China and Zhang Zhiyong came from Lining. In February 2002, Lining took the exclusive trademark rights of KAPPA brand in mainland China and Macao, and invested in the establishment of Beijing Trend Sports Development Co., Ltd. to operate. Chen Yihong, a former Li Ning Co CEO, took the post of chairman of Beijing trend sports. 3 years later, Chen Yihong bought the 80% stake in Li Ning Co. Zhang Zhiyong and Chen Yihong met Lining and worked together for many years. Chen Yihong understands and believes in Zhang Zhiyong's ability and has witnessed Zhang Zhiyong's glory in Lining's "taking the lead". This should be one of the reasons why Chen Yihong invited Zhang Zhiyong to join.

In October 2017, Zhang Zhiyong, who returned to sporting goods industry after resigning from sporting music, joined CEO in China. The trend in China was to sell 8.7% shares to 138 million shares at the time market price of Zhang Zhiyong. In January of this year, China moved again to Zhang Zhiyong, offering 9.4% shares and 24 million 910 thousand shares at the prevailing market price. With such a big hand, how did the Chinese trend change after Zhang Zhiyong joined?

In April 17th, the China trend announced Zhang Zhiyong's transcript for six months: the Kappa brand store (excluding Kappa children's clothing business and Japanese business), which has been in operation at the beginning of the same quarter of 2017, has been growing at the end of March 31, 2018, and the same store sales of the whole offline platform have increased in the same period of last year, and the group Kappa brand store (excluding Kappa children's clothing business and Japanese business) In the whole line, the retail sales volume increased by a year. In addition, the retail performance of Kappa's entire offline platform is recovering from 2017. In the first quarter, sales of Kappa are slowly recovering, but there are still shortcomings such as single brand category, brand influence and competitiveness decline. Of course, this can not be changed overnight, the Chinese sporting goods industry has been integrating, shuffling is far from over.

In the performance report of the 2017 annual report, Zhang Zhiyong is obviously unfulfilled: "this year, we intend to reduce the number of inefficient stores. At present, the size of the 1137 stores is not small. Therefore, the key to improving the company's performance is to enhance the efficiency of single stores. First of all, we will adjust the location structure of the store, then we will increase the strength in the benchmarking shop. In sum, quantity is not the first key. In 2018, the number of outlets will be controlled within 50 stores, but the new shop will also be controlled, mainly by changing the location and improving the overall image. This year, 25% of the stores will be renovated.

As for the electricity supplier, as of the end of 2017, Kappa has been participating in the Tmall double eleven Shopping Festival for nine consecutive years. In recent 6.18 online shopping promotions, Kappa has also joined Tmall's promotional activities and has performed well. It is clear that in the aspect of e-commerce channels, China's trend is also a matter of effort. In the long run, the popularity of national fitness will drive the growth of market demand, and China's sporting goods. industry The road of future development is still very long, and Kappa also needs to walk slowly.