Frequent Discounts Can Andemar Get Away With Low Prices?

Andmar, which is located in the "global high-end functional sports brand", has recently launched a low price promotion on the official website.

It is noteworthy that Andrew low price promotion has become increasingly normal.

In the WeChat applet, a company called "Hongkong Andrea discount" has been launched, many of which have zero sales of spike products.

In fact, Andemar was forced to choose the form of price markup because of persistent downturn in performance and high inventory.

In the industry's view, compared with Nike, Arthur, Anta, Lining and other sports brands, Andemar has no precise brand positioning. In the future, Andrea is still facing many challenges in the Chinese market.

Beginning in January 24th, Andemar designated merchandise to promote sales on the official website by 40 percent off. In addition, when entering the new year's password "UACNY888" at the time of settlement, it can enjoy an extra 1000 yuan reduction of 100 yuan, and the activity time ended at 23:59 on February 10th. The discount products involved were 519.

It is noteworthy that Andrew low price promotion has become increasingly normal.

In the WeChat small program "Hongkong Andrea discount shop", andrem products are doing spike activities.

Some of them are still more than 700 hours away from the end of the promotional activities.

However, even though Andrea wants to attract customers at a low price, there are still some zero sales.

Beijing Commercial Daily reporter noted that in the WeChat public number, called "UA Andrea UnderArmour", operated by the RSH Hong Kong LIMITED Royal sports special store, the only agent in Hongkong, a number of special products are also launched, and the frequency of updates has begun to frequent.

In the "UA Andrea UnderArmour" WeChat public number, after the "double 11" offer in 2018, the promotional activities launched by Andemar were released in December 11th, and 15 products were listed separately.

On the day of the "double 12" promotion Festival, Andemar also carried out 50 percent off seconds killing activities.

After less than a month later, Andemar again released the push, saying that there were 8 products participating in the "new year special" event.

And in half a month later, Andemar again released push special sale promotion.

In January 27, 2019, Andemar again released information on promotional activities, which was less than half a month away from the last release.

In this regard, the Beijing Commercial Daily reporter interviewed Andrea, as of press release, the other side did not reply.

Cheng Weixiong, general manager of textile and clothing management expert and Shanghai Liang Qi Brand Management Co., Ltd., frequently shows that the product inventory of Andrea is increasing, and the mainland market is not marketable, which can not meet the needs of the rapid upgrading of the domestic sports industry.

In order to offer a discount, Andemar was also exposed to the exclusive partnership with Alphabroder, a supplier of promotional products, in order to better clean up stock for Andrew.

Data show that in 2018, Andrew's two quarter earnings report, Andrew stock increased by 11% to 1 billion 300 million dollars.

According to Thinknum data, since 2018, the average discount of the products of the company has remained at 23%-27%, and the number of goods for discount is increasing.

This is also confirmed by the number of commodities sold by the third party retailers such as the Andrew business platform and Messi department store.

Some analysts pointed out that the increase in discount products or the expansion of discount rate means that Andemar's gross margin will be reduced.

The promotion of sales and the reduction of gross profit margin also affected Andemar's financial performance to a certain extent.

Looking back on the latest 5 earnings reports, we can see that in the September 30, 2017 earnings report, Andemar's net profit was $39 million 660 thousand, but it had dropped by 74.2%. At the end of 2017, Andrea had a loss of 48 million 260 thousand US dollars, and its net profit fell 118.78% over the same period.

In 2018, Andrew net profit continued to decline.

In 2018, a quarterly report showed that the net loss of Andrew net expanded to US $30 million 200 thousand over the same period last year to $30 million 200 thousand, down 1231.16% from the same period last year. In the two quarter of 2018, the loss of the company was more than 100 million US dollars, down 762.68% compared to the same period last year. In the three quarter of 2018, the net profit loss narrowed to 50 million 520 thousand US dollars.

Despite the continued loss of profits, the revenue has continued to rise.

Similarly, taking the latest 5 earnings reports as an example, in the three quarter of 2017, Andemar realized revenue of $3 billion 620 million, up 2.84% compared to the same period last year. At the end of 2017, Andrew's revenue reached 4 billion 977 million US dollars, up 3.13% over the same period last year.

In the first quarter of 2018, the growth of Andrew's revenue continued to expand to 5.85%. In the mid 2018, it rose 6.75% to 2 billion 360 million dollars compared with the same period last year. In the three quarter of 2018, Andrew's revenue continued to rise, up 5.06% to 3 billion 803 million US dollars over the same period last year.

One insider, who declined to be named, said: "Andemar's revenue has gone up, but net profit has been declining or even losing money. In fact, it is caused by too many frequent discounts and discounts."

Compared with Adidas and other sports brands, although Adidas's performance indicators are more than that of Mr Ma, the market value of Andemar is higher than itself.

Take Adidas as an example. Adidas's profit margin was 8.1%, while Andrea was 3.2%. Adidas's free cash flow yield was 3.4%-4.3%, while that of Adidas was negative for the same period.

A capital analyst believes that Andemar's real fundamentals are higher than market valuations and expectations.

In Cheng Weixiong's view, the rise in revenue but net profit decline is caused by a number of factors, including, but not limited to, the increase of subsidy return to distributors, the aggravation of market competition, the frequent discounts of sales promotions, and the continuous iteration of new and old brands due to the needs of new consumer groups, resulting in intensified operation and low operational efficiency, resulting in gross profit and reduced inventory.

In fact, Andrea is much younger than Nike and Adidas.

In 1996, Andrew was founded; in 2005, Andemar listed on the NYSE.

After the listing, Andrew sales increased from the initial 87 million US dollars to nearly about 4000000000 US dollars in the past two years, and the quarterly revenue for the 26 consecutive quarters increased by 20% over the same period last year.

In 2014, Andemar's sales in North America surpassed Adidas for the first time, and became the second largest sport brand, with a market capitalization of $15 billion.

But in recent years, the performance continued to slump, Andemar has heard the news that it will be sold.

In December 2018, Andemar, founder of Kevin Plank, said in an interview that he was considering selling Andrea, but the premise was that the price was right. He also pointed out that this is based on the consideration of shareholders.

In fact, this is not the first time Andemar wants to sell the brand.

In 2008, Chip Wilson, founder of Lululemon, a Canadian Yoga brand, discussed the acquisition with Planck, but eventually decided to give up because the target customer group of the brand could not find a meeting point.

Poor market performance also made Andrea have to start accelerating the expansion of the international market.

In 2011, Andemar officially entered the Chinese market and hoped to get a share in the Chinese market, but it was not smooth sailing.

Andemar had expected to open 800 stores in China in 2020, but according to Andrew's official website, Andrew's number of stores in the country is 229.

Can Andemar achieve the expected goal in 2020?

Cheng Weixiong believes that the key is to see the enthusiasm of distributors. If Andemar does not have proper policies and support, it will be difficult to reach 800 in 2020, and support is in place.

However, those insiders who declined to be named further pointed out that the expansion of Andrea store is also difficult because of the embarrassment of Andrew's position. In the comprehensive category, andremby is no more than Nike and Adidas, but it is inferior to Arthur and NEW BALANCE in the fine classification. The popular market is Anta, Lining, XTEP and other domestic brands.

For the future development of Andrea, Cheng Weixiong said: "sports brand must return to the functional demands of sports instead of moving away from the boundaries of sports and fashion, or blur its own brand positioning. We need to really deal with the rising process of China's sports market. Andrew's own international brand positioning, combined with research in brand promotion, product development, supply chain management and team operation capability, has a chance to break through."