Multi Brand Strategy Of Clarks Li Ning?

On November 4, Lion Rock capital, a Hong Kong private equity investment fund, and C & J Clark limited, a British shoe brand, fell through the negotiation. Lane capital will purchase 51% of Clarks' equity for 100 million pounds, becoming a major shareholder of the company. It was the first time Clarks' founders, the Clark family, had ceded control in 195. The Clarke family now owns 85% of the company, and the deal marks the official change of ownership of the brand in the past 100 years.

The reason why the deal has attracted widespread attention is not only the British 100 year old shoe company halo on Clarks' head, but also on the Chinese background of the buyer, the non-executive chairman of lane capital, the founder of domestic sports brand Li Ning. This also led to speculation that the Chinese sports brand, which guides the national trend, will start multi brand layout.

　 Clarks is seeking to sell a majority stake in the outbreak due to poor business performance

Clarks, a British shoe-making family from 1825, is famous for its exquisite shoe-making technology and comfortable casual shoes. Over the past two centuries, Clarks has become one of the representative British shoe brands, bringing desert boots, wallabee and other classic shoes to countless consumers. Clarks products are sold to more than 100 countries and regions around the world, with nearly 10000 employees. In 2004, he set up a brand company in Shanghai, in charge of Greater China and South Korea market.

Due to design, pricing and many other factors, Clarks' operating profit has declined year after year. According to statistics, Clarks's after tax loss reached 31 million pounds in 2017-2018 fiscal years. As of February 2, 2019, the company's after tax loss was 82.9 million pounds.

In March of this year, Clarks suffered huge losses due to the closure of stores. The company began to lay off 1000 jobs in May and began to discuss the feasibility of selling shares within the group.

As a private fund company focusing on the consumption field, Lane capital will not miss this good opportunity of "bottom copy".

In recent years, Lane capital has a wide distribution in the field of sports and consumption. The company invested in Suning sports in 2018, and participated in a $600 million round a financing led by Goldman Sachs and Alibaba. In the transaction, Suning sports was valued at more than 10 billion yuan. In January 2019, Lane capital and ISC Hong Kong reached an agreement to acquire all its 31.05% shares of Inter Milan football club.

The acquisition, Lane capital and Clarks reached an agreement, will inject more than 100 million pounds of new capital into Clarks in financial crisis, and will take over the retail business to keep all stores open. Lane capital's investment in Clarks has yet to be approved by its shareholders. The deal is also subject to the company voluntary arrangement ("CVA"), which covers the brand's stores in the UK and Ireland. In addition, Clarks is negotiating with landlords to demand a substantial reduction in rents.

As early as February this year, Jiang Jiaqiang, founder, executive director and investment committee member of lane capital, disclosed to European media that lane was looking for a family business with a long history of commercial development, and preferred to purchase controlling shares, and would selectively consider strategic investment of minority equity under specific circumstances. In Jiang Jiaqiang's view, there are many enterprises with a long history in Europe, and their growth prospects in the local market are very limited. They are happy to enter the Chinese market and share the growth dividend of China's consumer market. It can be seen that lane capital has been paying attention to Clarks for quite some time.

　 Li Ning's multi brand strategy: purchasing shoes and clothing brands in succession?

It is not only the news of the sale of Clarks, a century old brand, that arouses strong media interest. It is also curious whether domestic sports brand Li Ning will restart its multi brand strategy through international M & A, because Li Ning himself is an executive of Fang lain capital.

In the official press release, Lane capital also mentioned that Mr. Li Ning, the Olympic champion and founder of Li Ning company, was the chairman of the company. And on the official website of lane capital, Li Ning, who serves as a non-executive chairman, ranks even higher than Jiang Jiaqiang, founder of lane capital.

However, according to the media, Li Ning Company is not related to this acquisition. As one of the earliest multi brand sports brands, Li Ning company has operated a number of sports brands, but this road is not smooth. Li Ning himself also reflected in an interview with the media before that, "at that time, our core ability to make a brand was not mature. It was more inefficient to disperse and copy other brands, and the possibility of failure was greater. Moreover, it scattered its own resources and energy, which made the original team more fragmented."

Because of this, in 2019, Li Ning formally put forward the development strategy of "single brand, multi category and multi-channel", focusing on the development of Li Ning's main brand with resources. With China's Li Ning as the representative of fashion sports, basketball, running, comprehensive training and other categories of comprehensive strength, Li Ning's performance reached a record high in the year, and its market value exceeded 100 billion for the first time this year.

In this case, it is not necessary for Li Ning brand to take risks to acquire some brands that are still facing losses. Zeng Huafeng, chief financial officer of Li Ning group, once said that even in the future, mergers and acquisitions will achieve the effect of collective optimization with the existing business of the group, and be consistent with the overall brand image of the group. Li Ning's sports positioning is obviously not in line with the leisure brand.

We can also make an analogy with Anta, a multi brand strategy. In recent years, Anta has built a huge multi brand matrix through acquisition, but Anta's thinking is very clear, that is, around the core of sports, Anta's brand matrix is also divided into professional sports, fashion sports and outdoor sports.

Although the acquisition is not directly related to Li Ning company, we can see Li Ning's ambition for shoes and clothing consumer goods. On the deal, Li Ning also said: "Clarks is one of the world's largest consumer brands, we look forward to working with the founding family to continue to provide quality products and services to consumers."

In fact, in July this year, another company of Li Ning, Feifei China, announced its purchase of the clothing brand Bao Shilong for HK $46.62 million. This brand, founded by Hong Kong's "knitting king" Rodin bang, was once as famous as Giordano and Benny Road, and is now mired in losses. Under the epidemic situation, the survival of enterprises is more difficult, and Li Ning's one after another at this time is a good opportunity to copy the bottom.

Li Ning is finally making more choices for Li Ning's new strategy. Believing in the sports legend of "everything is possible", this time I would like to see how much more possibilities can be created by jumping out of sports.