Can Lining Still Be Able To Rise Against The Wind In The Face Of A Strong "National Tide"?

As a local sports brand, it has been on the same side of Lining for three hundred and thirty one degrees. But now they have gone through the same era. The market performance is different.

In the past year, Lining's revenue and net profit have increased significantly, while the revenue of 360% has almost zero growth. Net profit has fallen three levels, back to 5 years ago.

At present, the overall growth rate of clothing, shoes and hats and knitted textile products has declined significantly, and Lining's performance has shown gratifying growth. In July 2nd, the stock price has hit the highest record in 9 years, while the 31st degree is the opposite.

The market performance, such as low performance, bad stock prices and frequent closes, has to be questioned. What is the problem now? Will it become the next PEAK?

Listing 10th anniversary "lag" obvious

This year is the tenth year of the 31st degree listing, but the commemorative moment has not brought much joy to it. What did the brilliance of 31st degree missed? Why is it facing such a market predicament?

Can Lining still be able to rise against the wind in the face of a strong "national tide"?

1, bad earnings data, net profit fell sharply, the number of stores closed sharply increased.

According to the financial report of 2018, its revenue last year was 5 billion 187 million yuan, an increase of 0.6% over the same period last year. Net profit was 304 million yuan, and net profit fell 33.5%. The reason for its poor performance is due to the uncertainty of the domestic economic outlook in 2018, which has hit the confidence of enterprises and consumers, resulting in a weak consumer desire.

But in the same market environment, Lining's performance has gone all the way. In 2018, Lining's revenue rose 19% to 10 billion 500 million yuan, and its stock price continued to record. Obviously, 331 degrees can not justify itself.

According to the first quarter economic data released by the National Bureau of statistics, the growth rate of clothing, shoes and hats and needles and textiles in the first quarter of this year was 3.3%, the growth rate last year was 9.8%, and 8% in 2019. Visible, this year clothing shoes and hats show downward trend.

In the face of such a big environment, Lining said in the first half of 2019's earnings announcement that its net profit increased by less than 440 million yuan over the same period last year of 269 million yuan, an increase of over 160% over the same period last year.

In the first quarter of this year's operating summary, 360 degrees showed a low percentage increase, but no specific data were released. No matter how much it grows, there has been a huge gap compared with Lining's huge growth rate.

According to the mid-term earnings report in 2018, the footwear, clothing, accessories and children's clothing of 360 degrees were increased by 4%, 8.1%, 37.9% and 18.8% respectively compared with the same period in 2017.

It can be seen that the brand of children's clothing has become the only growth point. According to the present situation, the bonus period of children's wear market growth has disappeared. This is also one of the disadvantages of its business development. The main market depends on children's clothing market, once the market saturation and other factors will directly affect the growth of performance.

In 2015, sales of 360 children's clothing were 2350, and by 2016 the sales point had been reduced to 2000, and the sales point in 2017 was further reduced to 1797. Up to now, the whole market has closed more than 2500 stores.

By contrast, the number of Lining's sales outlets (including Lining YOUNG) totaled 6898 by the end of June 2018, up 168 from the end of last quarter and 463 from 2018 to March.

The loss of 321 degrees in the earnings and offline stores is by no means accidental. It is a disease that has accumulated over the years.

2, marketing strategy and market performance are misplaced.

In fact, 31st degree has made many efforts in marketing strategy, but it seems to have failed to achieve the desired results.

31st degree has been sponsoring high-end sports events and celebrities. By the end of 2018, more than 10 spokesmen had been involved in sports and entertainment. In addition, it has always adopted the marketing strategy of competitions, such as the Nanjing Youth Olympic Games in 2014 and the Jakarta international competitions in 2018. All of them are official sponsorship partners.

Even after sponsoring high-end sports events and celebrity endorsements, in fact, its marketing behavior is obviously misplaced with the market performance.

From the distribution of its main stores, we can understand one or two. By the end of 2018, there were a total of 331 stores.

5539, only 26% of the department stores are located in department stores. 74% of the stores are located below the three line cities, accounting for 7.4% of the second tier cities and 18.6% of the second tier cities respectively, compared with 26.5% in 2017. The proportion of big city stores has even declined in the past year.

In the process of brand remolding, it also concentrated on three or four line cities, specializing in low-end market, lagging behind in improving brand image and brand premium.

From the perspective of product sales, its main consumer market is concentrated in the middle and low end sectors. Up to now, the best sports shoes sold in Tmall stores are priced at 129 yuan and more than 10 thousand pairs in monthly sales, while the original price of the highest running shoes is 899 yuan, and the monthly sales volume is only one digit.

31st degree once tried to enhance the brand image and try to move into the high-end market. Its layout is hovering below the three line cities, and the consumer group is mainly low-end. The image and positioning of a brand are closely related to all aspects of its products, channels and marketing, rather than just shouting slogans in advertisements, and the effect is not good enough.

In addition, from its financial data, we can see that other business operations are also hard to say.

In 2018, the turnover of inventory was up to 110 days, reaching the highest level in five years. Footwear revenue fell 4.07% compared with the same period last year, while clothing rose by only 0.58%. By contrast, Lining's inventory turnover days were only 78 days.

At the same time, the development of its electricity business is obviously outdated. At the outset, the stores were down, trying to expand sales channels through online development. In 2018, the electricity business increased by 120 million yuan, an increase of nearly 40% compared to 85 million 900 thousand yuan in 2017, while the share of revenue rose from 7.7% to 14.3%, but it fell sharply behind Lining and other peers whose proportion exceeded 21%.

According to statistics from Zhi Lai Zhi, sales of two Tmall stores, Lining and 31st degree, reached 701 million yuan and 145 million yuan in the first 5 months of 2019, respectively. Although data disregard discount and other factors, there is a discrepancy between the data and the actual data, but the difference between the 31st degree and the former is obvious.

Moreover, its advertising and marketing sector is also the hardest hit area. It costs a lot of money but the harvest effect is almost negligible. According to the 2018 earnings report, its advertising expenses cost 557 million yuan, accounting for 10.7% of the total revenue, but only led to a turnover of 30 million yuan income. Such a high investment and low return way also let 360 degrees fall into an embarrassing situation of low performance.

It is worth mentioning that in 2018, Lining's advertising fee dropped from 11.1% in 2017 to 10.4%, becoming the only brand in the mainland where advertising fees dropped.

In general, the strategy and revenue of the 31st degree online failed to keep up with the troops. Now, in the face of stronger and stronger people, can 360 degrees be reborn through brand remolding?

How much is the winning rate of sports brand competition?

Now the local sports brand has formed the lead of Anta and Lining, followed by XTEP. Earlier Lining also suffered the storm, but today's Lining stock price continues to rise, and by many financial institutions optimistic, relies on "the national tide" all walks well. Where did Lining's excellent performance come from?

Can Lining still be able to rise against the wind in the face of a strong "national tide"?

1, why did Lining shoulder the lead to lead the country?

Lining once was the leading brother of the domestic sports brand, but he fell into a continuous downturn in the period from 2011 to 2014. The inventory was overloaded, most of which closed nearly 2000 stores a year, and was also suffering from the current experience of 360 degrees.

But in the same big environment, why can Lining stand out?

In the first half of this year, the Tencent news "Cai saw" made a survey of your favorite sports brand. According to the survey of 1876 people, nearly 1000 people voted for Lining, accounting for 42%. The proportion of people who liked Anta was 32%, while that of 31st degree was 7%. It can be seen that Lining still has a strong brand mark in the minds of consumers.

Today, Lining is widely praised for his novel design style in the fashion week of New York in 2018. According to its 2018 earnings report, Lining group's revenue amounted to 10 billion 500 million yuan, breaking the record of 9 billion 700 million yuan in fiscal year 2010, and passed the 10 billion mark.

Lining has regained attention by innovating his product, and constantly integrated into the strong Chinese style in design. Perhaps this is also the main reason for its re attracting the consumer's eye.

In order to make the enterprise develop faster, Guangxi has built one thousand factories in recent years, and has continuously introduced new products of COUNTERFLOW line. With the continuous innovation of Chinese traditional elements, its stock price continues to float. It seems to once again confirm the potential of the national tide brand.

In contrast, the brand rebuilding plan of 331 degree seems a bit inadequate.

There is no innovation in product design, which directly leads to the loss of mainstream consumers in a second tier city. Now, if you bet on this field with basketball as an entry point, are you still looking for another round?

2, bet basketball market space is wide, but the advantage is not obvious.

According to the preliminary plan of 31st degree, the first batch of basketball courts will be built in 15 first tier and second tier cities, and 1000 middle and high-end districts will be selected. The target size of 100 courts, 300 courts in 2021 and 1000 courts in 2022 will be gradually completed in 2020.

Basketball is, of course, because of its wide consumption space. According to Tencent Penguin think-tank "2018 China basketball industry white paper", basketball has become the first sport in China. Among the two typical groups of young people under 20 years old and 25-35 years old adults, the number of netizens who feed their favorite friends to basketball is 52% and 40% respectively, ranking the first among all sports.

According to the 31st degree, 450 million of basketball fans in China and 29.5% young consumers will buy basketball related products. It is undoubtedly correct to strengthen this relationship with this huge consumer market through this project.

However, the basketball market is also competing for a battle.

In the domestic market, apart from local Anta, Lining, and Nike, Adidas and other international brands. At present, Nike occupies a leading position in the Chinese basketball market. In the 2018 fiscal year, Greater China revenues exceeded US $5 billion for the first time, leading the world by 18% growth rate, among which basketball category has been an important contribution to Nike's performance.

Lining is also the sole official sponsor of 5 years of signing 2 billion of the top domestic league CBA. In addition, he signed Wade and became a successful case of the local stars. Wade's road is currently one of Lining's best selling products.

For Anta, basketball is the first sport category to set up its own department, and its NBA stars include Thompson, Hayward and so on. Anta is also the official NBA market partner and authorized supplier. It has the right to sell products with the logo of teams and alliances. In recent years, Anta has entered a period of high growth, and the performance of basketball products has contributed enormously.

In contrast, basketball resources of 331 degrees are relatively weak.

In April of this year, a pair of basketball shoes with the theme of "traditional Chinese culture" was launched. But in this year's performance of 618, the sales volume of Tmall flagship stores is only 300 pairs.

At the same time, the player who signed the contract is Frey Dieter, a former Shanghai foreign aid who has just returned to NBA. His market influence is no better than that of other high quality players. He can imagine that many of the hurdles that he wants to do in this field is very difficult.

Sustainable innovation is the way out in the future.

Throughout the industry's major brands, Anta betting basketball and Clay Thompson, Lining with the national wind and "China Lining" brand premium capability has been significantly improved, XTEP is also early completion of deep tillage field of strategic transformation.

It is beyond doubt that the basketball association market is still worth looking forward to.

At the same time, after the brand remolding plan was released, its share price increased by 2.1% to HK $1.46 in 10 minutes, and the market gave a positive response. But up to now, its stock price is HK $1.51, but there has not been a big increase.

From the long-term trend of its stock price, it is still a slide downward trend. The brand remolding plan is gradually maturing in the Chinese sporting goods market, and the share of the head brand is becoming more and more concentrated. If we want to go back to the heights of the previous brand, we must work hard on our own products and business strategy.

If we do not have the determination to break the boat, we just want to rely on the small trials to experience the severe test of the market. Will we be the next PEAK?