The Ups And Downs Of Domestic Sports Brands In Ten Years: The Formation Of The Three Tier Competition Pattern

In 2018, China once again entered the Beijing Olympic Winter Games and the Hangzhou Asian Games cycle.

This year has been ten years since the last Olympic Games in Beijing.

From the ten years of sporting goods industry, Anta sports, Lining, 31st degree and XTEP international listed four sporting goods companies which have survived in the winter of 2018 have handed in their semi annual reports in the near future.

Less than ten years ago.

Blind expansion of the real situation, today's sporting goods companies appear a lot of rationality.

From the point of view of revenue, the strength of the local sporting goods companies is strong. Generally speaking, the four companies have formed three distinct echelons. Their revenues and profits have increased, but the growth rate varies.

The pformation from wholesale to retail business is still going on, and the importance of e-commerce in all channels is becoming more and more important.

From a strategic perspective, the development from single Brand Company to multi brand groups is becoming a trend.

The formation of the three tier competition pattern

In the first half of 2018, Heng Qiang, the strong man in the domestic sporting goods industry.

Still sitting firmly in the position of the industry leader, a profit from both revenues and business surpasses three other revenue and operating profits.

After several rounds of adjustment, although Lining's revenue was ranked second, operating profit is still low in the industry, and profitability has always been lower than the industry average.

The revenue gap between the third tier and XTEP international is further tightened.

The growth rate in 2017 was 1.7 percentage points lower than that in the first half of this year. Business profits almost stagnated.

On the contrary, XTEP international reversed the declining trend of last year's revenue decline and achieved the fastest growth rate in the past five years.

Financial reports show that in the first half of 2018, Anta sports revenue reached 10 billion 554 million yuan, an increase of 44.1% over the same period, much higher than the average revenue growth rate of 22% of the four companies.

In terms of profitability,

Sales gross profit 5 billion 726 million yuan, an increase of 54.6% over the same period, an increase of 3.7 percentage points over the same period, gross margin reached 54.3%, a record high.

Operating profit amounted to 2 billion 689 million yuan, an increase of 41.7% over the previous year, exceeding 80% of the other three operating profits and operating interest rate of 25.5%, a slight decrease of 0.4 percentage points compared to the same period last year. The financial report explained that the increase in sales and distribution expenses was mainly due to the increase.

Lining, who ranks second, is also likely to hit a record high in the company's history this year.

According to the financial report, Lining's current business income was 4 billion 713 million yuan, an increase of 17.9% over the same period, and gross profit of 2 billion 294 million yuan, an increase of 20.5% compared with the same period last year, with a gross margin of 48.7%, an increase of 1 percentage points over the same period last year.

If the growth rate of revenue can be maintained in the second half of this year, Lining will break through the 10 billion mark of revenue this year.

Lining's last close to 10 billion targets was in 2010, when revenue reached 9 billion 455 million yuan.

That year is a watershed for Lining and Anta.

Since 2009, Anta has replaced Lining as a partner of the Chinese Olympic Committee. Since 2010, it has frequently appeared in major international competitions. The following year, its revenue has been tied to Lining, and has firmly occupied the first place in the industry.

However, although Lining's revenue is gradually recovering, its profitability is still hanging in the industry.

In the first half of 2018, Lining's operating profit was only 294 million yuan, even though the growth rate reached 45.54% over the same period, and the fastest growth in four.

The report shows that Lining's current operating interest rate is only 6.2%, far below the average operating rate of 18.58% of the four companies.

In fact, over the past few years, Lining's operating interest rate has been maintained at a single digit level. From 2017 to 2015, it was 5.8%, 8% and 0.2% respectively.

The main reason for Lining's low profit is the high distribution expenses brought by the upgrading of stores and the strengthening of user experience.

2018 semi annual report shows that Lining's current distribution expenses amounted to 1 billion 735 million yuan, accounting for 36.82% of total revenue, far higher than the average of four 20.55%.

The company's deep reading calculation shows that in Lining's expenses, the cost of employees has the greatest impact on net profit, reaching 540 million yuan, up 25.98% from the same period last year, accounting for 11.5% of the total revenue.

There is still a gap between the third tier companies and XTEP international and Lining in terms of revenue, but the competition between the two companies is becoming increasingly fierce.

XTEP and Lining are all shoes, and Anta international and Lining have different income from garments. The main source of income of the group is still footwear, which accounts for 45.2% and 61.61% of the total revenue respectively.

In fact, revenue growth has been weak since 2017. Revenue in the first half of last year increased by only 9.5% compared to the same period last year, and only 2.7% year-on-year growth was recorded.

In the first half of 2018, revenue of 331 yuan was 3 billion 17 million yuan, an increase of 7.8% over the same period last year, operating profit of 630 million yuan, an increase of 0.2% over the same period last year, almost stagnant, operating rate of 20.9%, down 1.6 percentage points over the same period last year.

Revenue growth and operating profit growth of 331% were lower than the average of four listed companies.

In its revenue division, the growth of children's clothing business is relatively strong, and its contribution to total revenue has reached 12%, an increase of 18% over the same period.

However, the international business, which was highly valued by 331%, has only 45 million 500 thousand yuan in current revenue, down 30.2% from the same period last year, accounting for only 1.5% of the total revenue.

Since 2015, XTEP international has made strategic pformation, clarified the brand positioning around running, brand marketing and R & D investment are also focused on running.

In the first half of 2018, XTEP international revenue was 2 billion 729 million yuan, an increase of 18.1% over the same period, operating profit of 592 million yuan, operating profit growth of 23.6%, operating profit rate of 21.7%, an increase of 1 percentage points over the same period last year.

In the past ten years,

One of the biggest changes is the pformation of business models.

In the past few years after the Beijing Olympic Games, the industry Carnival has accumulated a large number of stocks, while the growth of the industry slowed down, resulting in the discount of the shops, the damage of the brands, and the vicious competition of the industry.

In order to survive in the winter of the industry, the major companies realize that the growth mode of blind shop and inventory control to distributors is no longer feasible. The company needs to face the real situation of the retail terminal, strengthen the real-time monitoring and management of channel inventory, and establish a single store order mode with consumer demand as the inevitable choice, and the pformation of this business mode is still ongoing.

In the first half of 2018, the slow pace and prudent pace of opening new stores in the four companies' core brands were mainly new businesses and new brands.

The results showed that as of June 30, 2018, Anta sports Anta brand store (including Anta children's independent shop) had 9650 stores, compared with 2017 at the end of 2017, an increase of only 1.93%.

Anta group's Fila brand stores and Descente brand stores reached 1248 and 85 respectively, representing an increase of 14.92% and 32.81% respectively from the end of last year.

Lining is similar.

As of June 30, 2018, there were 6267 core brand stores in Lining, a net increase of 5 compared with the end of 2017, an increase of 0.08%.

And Lining YOUNG increased from 173 at the end of last year to 631, an increase of 264.74%.

The core brand of 331 core was 5604 in June 30, 2018, 3.51% lower than the end of 2017, and 1783 children in 331 children's clothing stores, a decrease of 0.78% compared with the same period last year.

XTEP international core brand has 6035 stores in the same period. XTEP did not announce the specific number of shops. However, it is clear that the number of shops opened this year is limited.

The replacement of new stores is the upgrading of existing stores.

The quality of the shops, including location, size, efficiency and interior decoration, is more important than the number of shops. Integration or closing of smaller and less profitable shops has opened up the industry consensus for larger and more efficient shops.

In addition to guiding distributors and retailers to shop location, store design and display, and encouraging shops to upgrade their image, in order to improve retail efficiency, companies have also strengthened real-time monitoring of store sales and inventory, such as Anta sports using ERP system, etc., to conduct more precise ordering guidance for retail stores.

XTEP international has also established a retail management team of more than 1000 people to support the operation of retail outlets.

XTEP's international financial report shows that direct stores have accounted for 60% of the total store sales. In the first quarter of 2018 and the second quarter of the year, the same store sales growth was low double-digit and double-digit respectively, while the newly decorated shops had more than 10% of the flat shops.

XTEP International said that due to the improvement of the profitability of the shops, the company cancelled voluntary support for the agents during the period, so the turnover period of receivables decreased.

From the earnings report, the overall operating capital turnover days of Lining and XTEP international decreased by 11 days and 20 days to 45 days and 83 days respectively, mainly due to the decline in the number of days of trade receivable turnover, and the two decreased by 14 days and 51 days respectively.

Another important change in the past ten years is the rapid growth of the revenue from the electricity supplier channel, which has gradually become the sales channel of key layout, and is gradually integrated into the O2O's full channel construction, instead of just being one of the channels to clean up inventory.

Financial reports show that in the first half of 2018, the income of e-commerce channel accounted for more than 20% of the revenues of Lining and XTEP international companies. The electricity supplier of Lining has achieved an increase of 30%~40% over the same period, and the growth rate of XTEP's international business revenue has also exceeded the offline channel.

The revenue of the 31st degree electricity supplier channel accounted for 10.9% of the total revenue, an increase of 185.5% over the same period.

Anta sports did not announce the specific data and the proportion of the electricity supplier channel revenue, but also indicated that the electricity supplier growth was strong.

The progress of multi brand strategy varies.

From a strategic perspective, expanding from single Brand Company to multi brand portfolio has become the trend of the industry. Apart from the development of children's clothing business, all of them have taken advantage of the introduction and operation of foreign sporting goods brands to seize the market segments. However, the focus of multi brand layout is different.

Anta sports is relatively successful in multi brand layout, and other brands outside core brands such as Anta children and FILA are developing rapidly.

Lining and XTEP international have also explored many brands in the past few years, but the results are not very satisfactory.

In the first half of 2018, Lining said that the next step will focus on the operation of the upgraded children's clothing business Lining YOUNG and Danskin.

XTEP international has taken an active attitude in the children's clothing business in the past few years. But since 2016, the company has reorganized and contracted children's clothing business. The focus of the next multi brand strategy will shift to the introduction of foreign brands.

There are also 360 degrees below.

Business, and revenue growth faster than the core brand, while the company also represents an overseas brand, but its active overseas business this year, revenue decline is obvious.

Anta sports report shows that as of June 30, 2018, there were 9650 Anta and Anta children's stores. There were 1248 FILA series stores, 85 DESCENT stores, 189 KOLON SPORT stores and 81 SPRANDI franchised stores.

Anta sports said in its earnings report that the brands outside the Anta core brand also achieved brilliant results, but did not disclose the specific revenue data of each brand.

Ten years ago, Anta sports began to layout children's clothing.

As of June 30, 2018, Anta sports already has three brands of Anta children, FILA Kids and Kingkow in the field of children's wear. The age ranges from 0 years to 15 years old, Anta children mainly cover two or three line cities, FILA Kids mainly covers the first and second tier cities, Kingkow is the brand of children's clothing that has just been acquired in 2017, and the high-end market is located. At present, the global stores have reached 63.

In addition to children's clothing, Anta also expanded other market segments through acquisitions and joint ventures.

At present, Anta sports group also operates FILA (including FILA Fushion), SPRANDI, KOLON SPORT, DESCENTE and NBA brands, respectively, on the high-end high-end sports, fashion sports footwear, outdoor, winter sports, basketball and other market segments.

In the past few years, Lining has also tried to build a new brand to occupy different levels of market, such as the spring sign for low price sports and leisure market and LNG for high-end sports and fashion market, but the result is not ideal.

In the 2017 annual report, Lining said that the other brands accounted for less than 1% of total revenue, so they were no longer included in the earnings Division since 2018.

Since this year, Lining has focused on the Danskin brand and its new business.

Business Lining YOUNG.

Last year, Lining upgraded the original children's clothing business to Lining YOUNG, with 3 to 14 years old children as the main consumer groups, providing running training, basketball and sports fashion products.

Danskin is the high-end women's fashion brand in the United States.

As of June 30, 2018, Lining YOUNG opened 631 stores in 29 provinces across the country, the number grew by 264.7% over the same period last year, and Danskin has opened 10 stores in the country.

Up to now, in addition to the main brand Lining, Lining has also run red double happiness table tennis products, AIGLE (Ai Gao) outdoor sporting goods, Danskin dance and yoga fashion fitness products, Kason (Kai Sheng) badminton products and Lotto (Le Tu) sports fashion clothing brand through its own, chartered, joint venture and joint ventures.

According to the data released by Lining in 2017, the total revenue of other brands is only 57 million 244 thousand yuan, accounting for only 0.62% of the total revenue of the year, except for the red double happiness revenue of 717 million yuan.

XTEP international has been shrinking its business in the past few years.

XTEP has developed XTEP children, XTOP and other brands for different market segments. In 2015, XTEP children's sales point once reached 600.

But since 2015, XTEP international has focused its main resources on the vertical market of running. Brand marketing and R & D investment are also focused on running special sports.

Since 2016, XTEP has reorganized children's clothing business, and has been more integrated with adult clothing from raw materials procurement and design to improve production efficiency.

In the first half of 2018, there were only 300 XTEP children's sales outlets.

XTEP said that due to the highly fragmented Chinese market, this year's attitude towards children's clothing business will be very prudent. Its multi brand strategy will mainly expand its position in the Greater China region by cooperating with international sporting goods brands.

The business of children's clothing is good.

The children's clothing business started in 2009. In the first half of 2018, children's clothing business revenue was 365 million yuan, an increase of 18.79% over the same period last year, accounting for 12.08% of total revenue.

In addition to children's clothing, 360 degrees also owns the trademark rights of Nordic outdoor brand ONE WAY in China.

As of June 30, 2016, there were 47 ONE WAY self operated stores in China, a net increase from the end of last year.

However, the overseas business of the 31st key layout has been declining this year.

According to the results of the report, although the global sales of 361 degree international products increased by 199 to 2888 stores, 361% of the international revenue accounted for only 1.5% of the total revenue. "Deep reading" calculation shows that 361 international revenue is about 45 million 500 thousand yuan, down about 29.3% from the same period last year.

In the earnings report, the 31st degree said it would continue to internationalize its opportunities through the Asian Games and the "one belt and one road".

The company's president, Ding five, said in an interview with the media that the entire 361 degree international line business will basically achieve balance in 2019, and will begin to make profits in 2020.