Peak Sports Announced A Financing Amount Of Nearly 1.5 Billion Yuan

The lagging peak ushered in the "blood injection" of capital.

On September 26, peak sports announced that it had obtained joint strategic investment from China Resources Xiamen consumption fund strategic leading investment, CCB trust and its subsidiary CCB (Beijing) investment, with a financing amount of nearly 1.5 billion yuan.

Peak was founded in 1989. With the rapid expansion of offline market and the marketing mode of binding with NBA players, peak was ranked as the top player of sports shoes together with Anta and Li Ning. Around 2009, many sports shoes brands went public, and peak successfully landed in Hong Kong stock market.

In the eight years since its listing, the market environment has undergone dramatic changes. In the wave of reshuffle in the industry, peak failed to maintain its market position, both revenue and net profit declined, and the share price was low. It announced its formal withdrawal from Hong Kong stock market in 2016.

In the past few years, there has been news that peak will return to the capital market, but there is no follow-up. Nowadays, the sports shoes and clothing market is occupied by Anta, Li Ning, Tebu and other head brands, while peak is lagging behind.

At the same time, since 2021, this market is still in the trend of rapid growth, and the head brand has produced a good report card. In June 2021, Hillard capital invested HK $1 billion in Tebu international. Prior to this, during the Tokyo Olympic Games, hongxingerke and other lagging brands also ushered in the opportunity for further development.

In a tuyere industry, peak also received the attention of capital again. This is also inseparable from the efforts made by peak in recent years to return to the mainstream vision.

Since 2016, peak has focused on science and technology positioning, and has launched state pole series products accordingly. Meanwhile, peak's once hot-selling shoes such as "big triangle" have also ushered in replica models.

At the same time of product innovation, peak is also attracting the attention of young consumers through marketing, and continues to promote single products in channels such as tremolo, xiaohongshu and station B.

For once lost offline market, peak is also about to launch a round of counter offensive war. Previously, about the purpose of the financing, peak sports CEO Xu Zhihua told many media that it would be mainly used in technology research and development, brand building, channel development and product upgrading. Among them, channel development includes entering the mainstream business circle of the first and second tier markets.

Can 1.5 billion financing help peak return to its former status?

　　 Why is the lagging peak "targeted" by capital?

Standing in the tuyere of domestic consumption may be an important reason for peak to obtain a new round of financing and be favored by capital again.

China's sports shoes and clothing market is continuing to break out, Anta, Li Ning and other brands have become the representative of the national trend, which is also a more popular investment field.

Their financial results are brilliant. From the data of Anta in the first half of 2021, its revenue has surpassed Adidas China. Li Ning's performance in the capital market is also remarkable. As of press release, Li Ning reported HK $87.3/share, with the latest market value of HK $217.9 billion, Anta's latest market value of HK $143.5/share, and the latest market value of HK $387.9 billion.

In recent years, through improving the appearance design, product quality and vigorously marketing, the domestic sports brand, which once made progress together with peak, has gone to the forefront, even surpassing foreign brands.

The financing obtained by peak is closely related to the overall background of the industry and the continuous growth of the scale of sports shoes and clothing market.

Over the years, after peak fell behind, it was in a state of slow development.

According to prospective industry research institute and Euromonitor statistics, in 2020, Nike topped the list with 25.6% data, followed by Adidas with 17.4%. Anta, a leading domestic brand, ranked third with a market share of 15.4%. Li Ning, Tebu and 361 degrees were 6.7%, 4.7% and 2.6%, respectively. Peak is not in the forefront.

In addition, domestic brands Li Ning, Anta and Tebu ranked No. 3, 4 and 5 respectively, while peak ranked No. 16.

Overseas market is a chip in peak's hands. In recent three years, domestic sports brands have deployed multi brand internationalization strategy. In addition to acquiring overseas brands, they have also established global management base and nationalized platform in China to carry out global layout.

Peak lost the domestic market, but gained good development in overseas market. According to the annual sales data released by global e-commerce giant Amazon in September 2020, peak sports ranked fifth in basketball category sales with 2.1% market share, ranking first in overseas market share of Chinese brands.

In the domestic market, peak is also striving for change. In the background of fierce competition among Chinese sponsors, peak sponsored the Tokyo Olympic Games clothing of five other countries in 2021 Tokyo Olympic Games. With the help of this wave of water spray, peak also gained a lot of attention.

In addition, Xu Zhihua once mentioned that peak has achieved breakthrough growth both online and offline since the launch of statepole technology at the end of 2018.

State pole technology refers to the technology mainly promoted by peak in recent years. According to the official website, the technology was officially launched in December 2018, focusing on Intelligent Adaptive shoe insole technology, which can provide different characteristics such as rebound, support and protection according to different sports conditions. In December 2020, state pole technology version 3.0 - ultra lightweight version was released.

After that, state pole technology began to be applied to peak products. Among them, the state pole 1.0 launched in 2019 has become a rare popular piece of peak in recent years.

According to media reports, in 2019, double 11 will be on sale for one hour, and the sales volume of state pole 1.0 will exceed 10 million, which will be the top of the list of online sales of running shoes on that day. Up to now, the cumulative sales volume of peak state series products has exceeded 15 million pairs.

Peak also hopes to continue the large unit strategy. In 2021, peak recreated the "big triangle" shoes, and announced at the press conference that player Wiggins will wear the triangle to play in the new season and become the spokesman of this series.

As a representative shoe of peak, the price of this pair of shoes has reached 1099 yuan, and the price of ordinary shoes has been from 799 yuan, becoming peak's basketball shoes at present.

Peak's "big triangle" has reappeared in the public's view. However, compared with the most attractive place of domestic brands at present - the "big triangle" with novel appearance design, high cost performance, high technology and high price, peak may need to spend more time to build consumers' trust.

Zhang Shuai, a partner of Yikai capital, once mentioned to the media that in addition to the industrial environment, the market is also optimistic about peak's scientific and technological attributes and the ability of the whole industrial chain.

If peak can establish its core competitiveness on this point, it can not only compete with other brands in differentiation, but also speed up the competition for the first and second tier market and high-end market on the basis of its main market facing sinking market, which may also be the capital's expectation for peak.

　　 Is this enough money to turn the corner?

Before the announcement of the financing, peak had been lost for a long time.

In 1988, Xu Jingnan, the founder of peak, prepared to build a factory in Quanzhou, preparing to do supporting processing for Nike. But when the factory was about to be completed, the cooperation between Xu Jingnan and Nike was cancelled, and Xu Jingnan established "Fengdeng" (the predecessor of peak). He spent a lot of money to keep the technicians of Nike factory, and bought advanced foreign production lines.

In those years, peak's rise mainly depended on the rapid expansion of offline market and the marketing method bound with NBA players.

At that time, most domestic brands were expanding their offline stores rapidly. Under the background that domestic consumers did not have brand awareness, the number of stores represented the sales volume of brands to a certain extent.

Peak's expansion is very fast. In 2009, on the eve of Hong Kong's listing, peak has more than 5100 stores in China, with a planned sales volume of 2.6 billion yuan in 2009 and a sales scale of 10 billion yuan in five years.

Unlike other sports brands, peak is the first Chinese sponsor to enter the NBA. In 2005, Yao Ming, who played for the Houston Rockets, attracted the attention of many domestic fans. Peak spent $4 million to become the sponsor of the team's home court. Since then, peak began to increase its sponsorship in the NBA, and signed Battier, Parker, Howard and other famous NBA players as its spokesmen.

What domestic fans are familiar with is that because of too many spokesmen signed by peak, every time a team wins the championship, there must be a signing player of peak, which is also known as "peak's law of champion".

With offline expansion and differentiated marketing promotion, peak has entered the head position in the field of domestic sports shoes. According to a 2008 frost Sullivan survey, peak ranked among the three most famous sports and basketball shoes brands in China.

In 2009, many sports shoes brands including peak went to the market. In the first two years of peak's listing, Anta and Tebu also landed in Hong Kong stocks.

However, during the eight years since its listing, peak's share price fell and fell again and again. Finally, it issued an official privatization announcement in July 2016, proposing that the offeror, Xu's sports, plans to privatize peak sports through an agreement, which plans to exchange HK $2.60 per share in cash, with an accumulated amount of about HK $2.5 billion. Three months later, peak announced its formal withdrawal from Hong Kong stock market.

According to the financial report, peak sports achieved 4.7 billion revenue and 800 million net profit in 2011, while in the last complete fiscal year before delisting, in 2015, the annual revenue of peak sports was 3.107 billion yuan, and the net profit was 392 million yuan.

At that time, the competition in the domestic sports shoes market was gradually fierce. At the same time, due to the influence of the market environment, the demand was insufficient, and the brand expansion speed was too fast. Many brands, including peak, encountered great inventory pressure. The average number of days of inventory cycle increased significantly, resulting in the decline of net worth and revenue, and also experienced a round of store closure.

In 2012, peak started its contraction strategy, and the number of retail outlets decreased from 7806 to 6483 at the end of 2012, with a net decrease of 1323. While shrinking offline, peak claimed to switch to online.

However, after this round of reshuffle, the head effect has become more obvious, Anta's market share has increased significantly, and peak has become one of the brands with the most serious performance decline.

After the crisis, peak lost its market positioning and strategy for a long time, while Li Ning, Tebu, 361 degree and other brands, which were also greatly impacted before, stabilized their market position after the crisis.

According to Euromonitor statistics, the market share of Anta, Li Ning, Tebu and 361 degree domestic sportswear shoes increased from 26.5% in 2018 to 29.4% in 2020. Among them, Anta city accounted for 15.4%, second only to Adidas and Nike.

Like many companies that have fallen behind, peak needs to tell a new story if it wants to return to its peak.

　　 Can peak's new story come true?

Peak has put forward a number of plans and goals, including launching online and offline channels, competing for medium and high-end markets, and exploring social marketing.

Back in 2009, after launching the Hong Kong listing plan, peak conducted three rounds of financing. At that time, peak's sales network was mainly in the second and third tier cities in China. However, Xu Zhihua once said, "part of the funds raised will be used to open stores in first tier cities such as Beijing and Shanghai.".

Peak always has a high-end dream to enter the first tier cities. According to the information disclosed to the media, one of the main purposes of this financing is channel construction. In the next three years, peak will open 800-1000 peak state stores in the first and second tier markets.

At the same time, peak also said that it would not only open stores, but also enter the mainstream business circle. Vientiane City, a shopping mall of China Resources Group, would provide support for peak stores to enter the core business districts of first and second tier cities.

Anta and Li Ning are also seizing the middle and high-end consumers in the first and second tier cities. And they have also made great achievements through the shortcut of acquisition. The FILA, dishant and Kelong sports purchased by Anta belong to the middle and high-end sports shoes and clothing brands, which have won many middle and high-end customers and emerging consumer groups of the younger generation.

Pick, a step slower, needs faster speed and more investment.

It can be seen that peak has been emphasizing its technological positioning since the launch of state pole 1.0. Back ten years ago, when the domestic shoe market did not pay attention to quality, most of the consumers' good opinion for peak came from its materials.

Previously, Cai Weijian, the product director of peak state series, mentioned that in 2016, peak announced the completion of privatization and delisting from Hong Kong, hoping to prove itself to the mainland market again. At that time, under the continuous pressure of the whole company seeking breakthroughs, it turned its attention to the possibility of scientific and technological breakthroughs.

A fact that can not be ignored is that after the adjustment of appearance design in the past few years and the continuous investment in R & D, domestic brands have a certain strength in aesthetic and product quality.

For peak, materials and technology may be competitive, but design is still its weakness. If peak wants to capture the consumers in the first and second tier markets, this is an urgent problem to be solved.

In addition to seeking breakthroughs in products, peak has also begun to devote its efforts to marketing, trying to promote it on social media where young people gather, such as shuoyin, station B, and xiaohongshu.

It not only went into the live broadcasting room of the head anchors such as Weiya, but also carried out live broadcasting with goods on several platforms such as shuoyin and Taobao, and even Xu Zhihua also tried to live broadcast to promote the brand.

From the expansion of online and offline channels, to the investment in product research and development, and to continuous marketing promotion, peak needs more ammunition to compete with the expansion speed and sprint to the middle and high-end market compared with Anta and Li Ning, which are well funded.

It is undoubtedly of great importance for peak to explore financing channels after listing. Over the past few years, peak has repeatedly signaled that it will return to A-share listing.

However, in order to gain recognition in the capital market, peak needs to put together the current 1.5 billion financing. The domestic sportswear and shoes market is still undergoing drastic changes. Can peak become the "shoe king" again?