The Competition Between The Four Major Sports Brands In China: The Homogenization Of Anta And Lining

Behind the growth of performance, there are still worries about domestic sports brands. Recently, the four major sports brands in China Anta (02020.HK), Lining (02331.HK), 360 degree (01361.HK), XTEP (01368.HK) semi annual performance report was released, and four enterprises achieved double growth in net profit.

The large-scale development of the sports industry in recent years has brought many opportunities for the development of sports brands. However, while the growth of Anta and Lining's brand performance has been increasing, there are similar brands such as del Hui, Hongxing Erke, PEAK and so on. Insiders said that the domestic sports brand is currently in the shuffle period, and there will be one or two giants in the future.

However, there are hidden dangers behind the growth of the four major brands. Slow growth, slow growth of main brands, severe homogenization of products, high inventory and other pain spots still shroud the whole industry. Industry analysts said that domestic brands are still in the traditional stage of "price comparison", and the homogenization of products is serious.

Net profit increased by double, net profit Lining bottom.

Sports market continues to grow, and domestic sports brand performance is also growing. As of the evening of August 29th, the four major sports brands in China Anta , Lining , 360 degree , XTEP Both issued semi annual performance reports. The blue whale producer has inquired about the above four enterprises' performance reports, and found that their performance all appeared the phenomenon of double profit of net profit.

Among them, the most brilliant performance Anta Business income of 10 billion 553 million yuan, an increase of 44.1% over the same period, is the only one of the four brands with revenues of tens of billions of dollars. Net profit was 1 billion 945 million, an increase of 34% over the same period, and gross margin of 54.3%, up 3.7% from the same period last year.

　　 Lining Operating income reached 4 billion 713 million, an increase of 17.9% over the same period, and net profit of 269 million, an increase of 42% over the same period last year. Gross margin increased by one percentage point to 48.7%. 360 degree Operating income was 3 billion 16 million, an increase of 7.8% over the same period, net profit 335 million, an increase of 5.3% compared with the same period last year, and gross margin of 41.6%. XTEP International Operating income of 2 billion 729 million yuan, an increase of 18% over the same period, net profit of 375 million, an increase of 21% over the same period, and gross margin of 43.7%.

Cheng Weixiong, an independent analyst in shoe and garment industry and general manager of Shanghai Liang Qi brand, told an interview with blue whale producer that at present, the big health industry in China is rising and is in the shuffle stage for sports brand. At present, Anta is in the leading position of the domestic sports brand, while Lining is in the repair stage, and XTEP is in the spanformation stage.

It is worth noting that in the second tier of 331 degrees and XTEP, although operating income slightly worse, but net profit is more than Lining. In this regard, Cheng Weixiong told the blue whale producer, Li Ningzheng is in the recovery stage, if there is no major strategic change, it is difficult to surpass Anta. However, Lining is also "thin dead camel than horse big", 360 degrees and XTEP is also hard to surpass. Lining's problem lies in its distribution mode. While taking the direct battalion mode, it also needs to adopt the wholesale mode. In recent years, it has increased investment in the electricity supplier, and through a large number of online businesses, the gross profit will inevitably affect the net profit.

Hidden troubles in the growth of performance

The growth of the major brands is closely related to their younger strategy. Anta said its revenue net profit rose largely due to strong growth in clothing sales. Although Anta did not disclose the revenue of FILA this year, public data showed that Anta had said in its 2017 interim results conference. FILA Revenue accounted for nearly 30% of Anta's total revenue.

Lining entered the public eye by the two fashion week. In February this year, Lining's "enlightened Dao series" of New York fashion week combines Chinese ancient craft with modern fashion style, and takes a big step in the internationalization strategy. In June 21st this year, Lining's appearance in Paris fashion week once again attracted the attention of the fashion industry. It is noteworthy that although Lining began to embark on the international stage, his overseas market performance was not satisfactory. It is understood that its international market revenue is about 73 million 640 thousand yuan, down 19.5% compared with the same period last year.

XTEP has become the official designated sports brand of the new rap program in China and signed the seven NEXT of lohua in June this year. Sports marketing has also become an important way for sports brands to create influence. Recently, Sun Yang's "dressing door" storm reflects Anta's brand marketing war with 360 degrees. To implement the professional sports strategy, XTEP has also become the most popular local sports brand sponsoring marathon events, sponsoring 14 running events.

Cheng Weixiong told the blue whale producer that FILA has contributed a lot to Anta's performance. This proves that it has trampled the draught and imported foreign brands in a timely manner, which has brought profits to the enterprise, but this also proves the short board of its own brand. The introduction of brand can only get short-term profits, which is not good in the long run.

"Sports marketing is only a manifestation of advertising competition among brands. At present, sports brands in China are still following such a traditional path, but have not done a good job in brand segmentation. The brand itself is not strong enough to compete with foreign brands such as Nike and ADI. " Cheng Weixiong said.

The main business is weak, and the product is homogenized.

In recent years, the large-scale development of China's sports industry has brought many opportunities to sports brands. Public information shows that at the 2018 national sports industry development conference, the National Bureau of Statistics announced that the total scale of sports industry in China in 2016 was 1 trillion and 900 billion yuan, with an added value of 647 billion 500 million yuan, accounting for 0.9% of the total GDP in the same period. According to Zhang Dongyou, deputy director of the accounting department of the National Bureau of statistics, from the perspective of the internal structure of the national sports industry, the total output and added value of sports goods and related products are the largest, respectively, 1 trillion and 196 billion 210 million yuan and 286 billion 390 million yuan, accounting for 62.9% and 44.2% of the total output and added value of the national sports industry.

With the development of sports industry, the domestic sports brand is also coming to the draught. However, some brands like Dell Hui are dying. Hongxing Erke, PEAK and other brands are gradually fading away from the public view. There are also hidden worries behind the four major sports brands.

From inventory, Anta, Lining, 31st degree, XTEP Inventory were 2 billion 274 million, 1 billion 159 million, 841 million, 1 billion 28 million; average inventory turnover days were 83 days, 85 days, 85 days, 104 days. Cheng Weixiong told the blue whale producer that such data still have a gap compared with foreign brands, which reflects the common problems of sports brands in China and proves that the enterprises are more pressing, which is a test for the company's capacity planning, product development, supply chain management and store efficiency.

In addition, the slow growth of performance has also become the bottleneck of the development of the industry. From the data point of view, Anta's fastest growth in revenue grew by only 44.1%, and Lining's net profit grew by 42%.

Cheng Weixiong said that although the sports brand is in the development stage, the domestic brands are relatively homogeneous, and the main brand has been growing feeble. At present, the top four brands have launched a series of children, but in fact, children's clothing market has also been overcrowded. At present, domestic brands are still in the traditional stage of "price comparison".

"The future brand will go to the category subdivision, specialized to do a certain category, make the brand more refined, there will be great room for development, for example, Arthur specializes in running shoes. At present, XTEP has made some product subdivision, but it is still not elaborate enough. The difference between domestic sports brands is not obvious, and no giant has yet emerged. The future industry will be further focused. " Cheng Weixiong said.