XTEP 1 Billion 800 Million Buys The Brand? A Battle Of Ambition Is Inevitable.

In the backdrop of Anta, the local sports brand "big brother", who offered to buy Finland sports giant Amer Sports, XTEP seems unwilling to lag behind.

So far,

In April 18th, according to a number of Korean media reports, XTEP, the domestic sports brand, will buy the US shoe brand K-Swiss, based on the price of 270 million US dollars or 1 billion 800 million yuan.

K-Swiss was founded in 1966, and was first known for being the world's first double leather tennis shoes. It was bought by E-Land World, Korea clothing group's clothing and entertainment group in 2013, when the paction price was about $170 million.

Data show that K-Swiss net profit in 2018 was US $110 million.

This further confirms that the strategic clarity of XTEP's development from single brand to multi brand group also means that XTEP and Anta, Lining and other competitors have entered the second wave of collective climbing.

XTEP takes the power of San Cony, Mai le and the acquisition of gestapi to enter the new market and replicate the Anta model.

However, Anta reversed FILA's losses and made it the backbone of the group, which also took Anta almost ten years ago.

XTEP has no experience in M & A before. Multi brand operation will be a long-term pformation process. If energy is dispersed, it can not effectively integrate resources, which may affect the original market of XTEP. Many brands that can be quickly acquired may even become a "bottle of oil" for performance.

After Anta and XTEP introduced "overseas brands" one after another, it was pointed out that the field of local sports brand has already set off another wave of mergers and acquisitions.

With the strong recovery of the domestic sporting goods industry and returning to the fast growth channel, the new stage of development of the domestic sports giant has basically taken shape.

The "secret warfare" of the three sports giants in China

With the clarity of the domestic sports brand strategy, an ambitious battle will inevitably be inevitable, especially with the three major domestic sports giants listed in Hongkong.

According to the latest news from a number of Korean media, XTEP, the domestic sports brand, will buy the shoe brand K-Swiss of the United States at the price of 270 million US dollars or 1 billion 800 million yuan.

K-Swiss was founded in 1966, and was first known for being the world's first double leather tennis shoes. It was bought by E-Land World, Korea clothing group's clothing and entertainment group in 2013, when the paction price was about $170 million.

Data show that K-Swiss net profit in 2018 was US $110 million.

This further confirms that the strategic clarity of XTEP's development from single brand to multi brand group also means that XTEP and Anta, Lining and other competitors have entered the second wave of collective climbing.

With the strong recovery of the domestic sporting goods industry and returning to the fast growth channel, the new stage of development of the domestic sports giant has basically taken shape.

According to China Business Industry Research Institute, the main business income of domestic sporting goods industry reached 148 billion 490 million yuan in 2017, an increase of 6.3% over the same period last year.

From 2013 to 2017, the income and profit of China's sporting goods industry were increasing. The average annual compound growth rate in five years was 7.64% and 9.37% respectively, and the growth rate was very fast.

With the support and guidance of national policies, the sporting goods industry is expected to achieve rapid development.

It is estimated that the scale of sports industry income will exceed 200 billion yuan by 2022.

Another consulting company Azoya Group data, China's sports apparel market value is estimated to exceed 31 billion U.S. dollars, the second largest market in the world.

XTEP: professional sports, multi brand, channel sink

Looking at the latest initiatives of XTEP in the past two years, its multi brand and internationalization strategy is very clear now.

In March this year, XTEP issued a statement that the wholly owned subsidiary of Xtep Holdco and the joint venture partner Affiliated Companies Wolverine have signed a number of joint venture agreements to jointly operate the outdoor sports brand Merrell Mai le and running shoes brand Saucony St. John's brand shoes, clothing and accessories in the Greater China region's development, marketing and wholesale business.

The announcement shows that Xtep Holdco and joint venture partners have paid the initial capital of the agreement to the joint venture company for about 155 million yuan.

XTEP directors believe that the joint venture will help companies upgrade to multi brand portfolio groups to cater to the growing maturity of Chinese consumers.

From K-Swiss to San Kang and Mai Le, XTEP aims to target the high-end professional sports brand directly, and continues its consistent professional sports strategy.

Last year, XTEP's gross revenue rose 24.8% to 6 billion 383 million yuan over the same period last year, with the growth rate of 30.4% in the second half of the year, up 18.1% from the first half of last year, and the net profit rose by 60.9% to 656 million yuan. This is also the first full annual report released after the pformation of XTEP. The beautiful performance has attracted widespread attention. In addition, XTEP recorded 12 billion 200 million last year's retail sales, which has stabilized the position of one of the top three local sporting goods brands and one of the top five global sporting goods brands.

Anta: multi brand, international, event sponsorship

It is reported that Anta and Fang Yuan capital, AnameredInvestments and Tencent consortium of investors to buy about 4 billion 660 million euros for outdoor sports brand Amer Sports.

The tender offer was closed in March 29th. The results showed that Anta's shares in the tender offer accounted for about 98.11% of Amer Sports's total shares and voting rights, and Amer Sports was about to be delisted from the Helsinki stock exchange.

At present, the new board of directors of amamin sports has been formally established, and Ding Shizhong has been appointed chairman of the board of directors.

The reason why Anta has the strength to "swallow" the top brands of the industry is due to the deep ploughing of the brand in the domestic sports market in the past 10 years.

According to Anta's IPO prospectus, Anta's revenue in 2006 was 1 billion 250 million yuan, nearly 2 times that in 2005, and net profit was 147 million yuan, 3 times that of 2005.

After ten years of listing, Anta's operating income in 2016 reached 13 billion 350 million yuan, the growth rate reached 20% in third consecutive years, and net profit increased 16.9% to 2 billion 390 million yuan.

The turning point is to sponsor the Olympic Games in China.

At present, Anta group, by acquiring brands for different positioning and market segments, fills the gap in these markets on the one hand, and absorbs the experience and professional and outdoor brand technology of mature brands on the other hand, and initially forms a brand matrix of three segments, namely, mass professional sports, high-end fashion sports and professional outdoor sports.

However, because of the smaller scale of the brand of amavin sports in China, Anta needs to help them play synergy, which poses a great challenge to Anta's digestion and collaborative management capabilities.

Lining: sports fashion, brand IP, first tier cities

Unlike Anta and XTEP, in order to implement multi brand strategy with international acquisitions, Lining focuses on the main brand, develops around Lining IP, and then strengthens its product lines.

Following the landing in New York fashion week last February and the men's week in Paris in June, Lining's fashion strategy became clearer.

By strengthening the property of "China Lining", the fashion and tide brands of sports shoes and sportswear are upgraded. Aiming at the millennial generation of young consumers, Lining has gone out of a differentiated fashion of sports and fashion compared to Anta and XTEP.

Lining's high-end fashion strategy has gradually affected the brand's channel strategy, and will take a second tier city as the main battleground in the future.

In the first half of last year, Lining's clothing business income exceeded the core footwear business income, accounting for 48.7% of total sales, which means that Lining's promotion of fashion and the "going out" plan came into effect.

Sports fashion category retail sales growth rate reached 42%, higher than other categories of growth, annual sports fashion clothing sales exceeded 5 million 500 thousand.

epilogue

It is foreseeable that the three sports brands will not only face fierce competition in the domestic market, but also represent the Chinese brands and the global sports brands such as Nike and Adidas. The Chinese market has become the most important strategic market for Nike and Adidas. Adidas has already set up its Asia Pacific headquarters in Shanghai, China.

According to Tianfeng securities data, in 2018, China's sports user market had only 28.6% share of local brands, while foreign brands had a 54.3% share. For domestic sports brands, it is still a long way to catch up with brands like Nike and Adidas.