Skech: The Rising Star Of Differentiated Breakout

Differentiated breakout of the rising stars. Skech was founded in California, USA in 1992. Although it was born later than other sports brands, it developed rapidly. In 2018, Cage achieved $4 billion 642 million in revenue and 23.13% in revenue in 2013-2018 years, the fastest growing sport brand. Skech once surpassed Adidas in 2016 to become the second most popular sports shoes brand in the US.

Two major points of the company's future look: 1) Skech positioning sports and leisure, taking the Eastward Development of the industry, continue to enjoy the "sports + Leisure" bonus; 2) the rapid growth of China's income, the channel sink to open the future, is expected to surpass the United States to become the first major business area.

By studying the development process of the company, we summed up the elements of Skech's success and inspired the domestic sports brand:

1) products: "fast fashion" in sports shoes. Skech product positioning in sports and leisure, consumer oriented product development response is fast, every year for different levels of consumers design more than 3000 kinds of shoes, SKU up to 10000. Comfort and fashion are the key words of Cage's products. Nearly 65% of revenue comes from female consumers.

2) brand: differentiated competition and young people. Skech is positioned in the market vacuum belt of "Nike, ADI, Anta and Lining" to provide consumers with cost-effective shoes. Brand communication is mainly targeted at young people aged 18-25, with less investment in traditional marketing and winning in entertainment marketing. Idol stars, hip-hop college and variety show cooperation are key words for Skech to communicate with young consumers.

3) channels: strategic transformation is timely, and international business takes joint form and strong alliance. With the maturity of local businesses, the company has taken the initiative to adjust its strategic direction, vigorously develop international business, and find strong partners in the international market to jointly develop the local market. In the fastest growing region of China, the joint venture's future channel strategy is to store and sink channels. In addition, the company attaches great importance to the development of direct business as an important channel for stabilizing the development of the company.

4) supply chain: mature supply chain system and quick response business. The company's production is completely outsourced, but strict admittance and supervision to suppliers and manufacturers are needed to ensure the efficiency of production and sales and product quality. With the development of the business, the company is also upgrading in warehousing and logistics.

The enlightenment to domestic sports brand: 1) clear the brand positioning and fully convey clear brand image to consumers; 2) product development takes full account of the trend of fashion and consumer demand, and react quickly; 3) pay attention to the role of direct channel (or direct channel) in the whole business process; 4) cooperate with excellent manufacturers, which is very important for ensuring production efficiency and product quality.

Investment suggestions: by analyzing Cage and Its Inspiration to domestic brands, we recommend domestic sportswear dual leading Lining (2331.HK) and Anta sports (2020.HK), and Lining will continue to improve their earnings and profits in the future by strengthening their strengths. Anta sports has developed into an excellent multi brand sports group with full potential for development.

Risk warning: 1, under the pressure of the macro economy, the garment industry continues to bear pressure; 2, the management of the company has undergone significant changes; 3, the expansion of the channel is not as good as expected.