Textile And Clothing: Adidas' 5-Year Plan Raises Digitization Again And Looks Forward To China'S Leading Leader

Introduction to the report

ADI's new five-year plan takes digital + DTC as an important development direction; at the same time, Greater China region has also become the most important driving force for the company's growth. We are optimistic about China's sports apparel market, but also optimistic about the digital transformation of China's clothing leader.

Key points of investment

ADI announced the new five-year plan, and digital + DTC also became the key breakthrough point. ADI announced the 20q4 performance. The revenue of the company as a whole and greater China region turned positive for the first time in 20 years. The company's revenue increased by 1% / Greater China's revenue + 7%.

More importantly, ADI announced a new five-year plan for 21-25 years, stepping into the digital era together with Nike and Anta. In the 21-25 five-year plan announced by Adi, focusing on consumers, it focuses on brand reputation, consumer experience and sustainable development. From the perspective of specific implementation direction:

(1) in terms of brand reputation, ADI has defined its five core categories: football, running, training, outdoor sports and sports life. By 2025, these five categories will account for 95% of ADI's revenue growth. At the same time, like Nike, ADI is paying more and more attention to the proportion of women's market, and hopes that in the next five years, women's consumption income will average double-digit growth every year.

(2) in terms of consumer experience, DTC and member programs are the core of ADI. First of all, ADI hopes to increase its membership from 150 million at present to 500 million in 25 years; secondly, ADI is rapidly establishing a DTC network, hoping that the DTC system composed of online and direct marketing channels will account for half of the company's revenue and contribute 80% of the revenue growth in the next five years. ADI hopes that e-commerce sales will double to 8-9 billion euro in 25 years compared with the current 40 Euro, accounting for 25% of the company's revenue from 20%. At the same time, on the one hand, the company establishes digital system in its own channel, on the other hand, it also needs to speed up the digital ability of its partners.

(3) in terms of sustainable development, ADI hopes to increase the proportion of sustainable materials from 60% to 90%, and reduce the carbon footprint of each product by 15% in 25 years.

We see that in addition to the efforts of brand positioning and sustainable development, digitalization and DTC will be the most important link for ADI to improve the consumer experience. ADI plans to invest 1 billion euro for digitalization in 25 years, hoping to realize digitization in product research and development, manufacturing and final sales. ADI hopes to recruit 1000 digital talents in 21 years to build a larger digital team.

It further proves that there is still room for China's sports market. In addi's new five-year plan, Greater China will become the focus, and the income is expected to maintain low double-digit growth in the next four years.

ADI hopes that the company's overall revenue in 21-25 years will grow by 8% - 10%, the operating profit margin will be increased from 10% in 19 years to 12% - 14%, and the annual net profit will be increased by 16% - 18%.

Among them, since 21 years ago, ADI has separated Greater China into three core regions, which are parallel with North America and EMEA. ADI hopes that in 21-25 years, under the guidance of digitization and direct marketing channels, Greater China will maintain an average annual growth rate of low double-digit (based on 21 years), and increase its proportion of total revenue from 22% in 20 years to 28%. We believe that on the basis of 15-19 years' income and doubling (2.5-5.3 billion), ADI still puts forward such a high-speed growth target, which fully demonstrates the company's sufficient confidence in China's sports apparel market.

The general direction of digitalization has become the consensus of the industry, and we will continue to be optimistic about the industry leader who takes the lead in starting

We believe that from ADI's five-year plan, we can clearly see that: (1) ADI is optimistic about China's sports apparel market; (2) international giants' recognition of DTC and digital path. We believe that this more refined and efficient business model has become a recognized future development path for the industry after Nike took the lead in proposing digitalization and DTC and achieved success.

Among China's leading apparel companies, Anta has proposed the strategy of DTC to recycle some franchisees, increase the proportion of online sales and offline direct sales, and vigorously promote the construction of digital system including the construction of official website, the establishment of CRM overall mode, the intelligent commodity project, and the digital platform. We look forward to DTC's more efficient goods turnover system and more rapid and accurate feedback of digital system on consumer demand, which can lay a solid foundation for Anta's long-term high-speed growth. At the same time, in the fast fashion track, Pacific bird is also expected to invest 800 million to build its own digital system, looking forward to seeking new breakthroughs in the field of fast fashion.

We are looking forward to the progress of Chinese clothing brands represented by Anta sports and taipingniao on the road of digitalization and continue to be optimistic.

Risk tips: repeated outbreaks lead to lower terminal consumption than expected.