On July 15, 2020, Anta announced its operating performance in the second quarter and first half of 2020, its interim results forecast and the restructuring of Descente China.
The company’s sales picked up in the second quarter, FILA Return to positive growth
The company expects sales to be flat or fall by no more than 5% in the first half of 2020, and net profit attributable to the parent company to fall by no more than 25% year-on-year (excluding losses from the Amer joint venture) ). The sales of Amer Sports, the parent company of its Canadian outdoor brand Arc’teryx, were affected by the warm winter in the first quarter of 2020 and the overseas epidemic. If the losses of the Amer joint venture are included, the net profit attributable to the parent company will not fall by more than 35% year-on-year.
The gross profit margin of ANTA brand and FILA brand business both dropped slightly, which was a factor causing the decline in net profit
Anta mainly uses wholesale Model, in the first half of 2020, the company repurchased about 15% of its products. These products were resold through e-commerce and outlets, and the gross profit margin of the products was relatively low;
FILA mainly adopts a direct retail model, and promotional clearance activities lead to increased retail discounts.
In addition, the company has also taken the initiative to give distributors more flexibility in accounts receivable. The increase in overall employee costs has also affected the company’s profits.
From the sales perspective of each brand, sales picked up significantly in the second quarter. All brands achieved better-than-expected retail performance, and growth accelerated compared with the first quarter. What is noteworthy is that the FILA brand has returned to positive growth, and Descente has achieved a growth of 60%+.
Descente China restructures and injects intellectual property
According to the information announced by Anta’s subsidiary Descente China Holdings Co., Ltd., Descente China is a joint venture. Currently, Anta Sports Group owns 60% of its shares and is a wholly-owned subsidiary of Descente Ltd. The company Descente Global owns 30% of the shares, and Itochu, a wholly-owned subsidiary of Itochu Corporation, owns 10%. Descente China controls entities that operate the Descente brand business in mainland China, Hong Kong and Macau.
According to the restructuring of Descente China, Descente will inject Chinese intellectual property rights into a newly established entity (“IPSPV”), which is wholly owned by DescenteGlobal Owned by DescenteGlobal, DescenteGlobal injected 90% equity in IPSPV into Descente China and increased DescenteGlobal’s equity in Descente China.
Previously, Desante’s trademark was not included in the joint venture, so Desante’s trademark usage fee was paid every year. As Descente’s own shareholding structure has changed, the new board of directors now pays more attention to China business.
In 2019, Descente China operated 136 retail stores in mainland China, with retail sales approaching 1 billion yuan and achieving profitability. Ding Shizhong, chairman and CEO of Anta, has repeatedly mentioned that market segments are opportunities for Anta to catch up with international giants in the future, while Descente is expanding its market in the high-end and winter sports fields.
About Anta
The ANTA brand was founded in 1991 and in 2007 Listed on the main board of the Hong Kong Stock Exchange in 2020 (stock code: 2020), it is China’s leading sporting goods company. In August 2009, Anta acquired the trademark use rights and franchise rights of the Italian fashion sports brand FILA in China owned by Belle International for 332 million yuan.
Based on the successful cultivation experience of FILA, Anta started the “single focus, multi-brand, omni-channel” strategy in 2016, and proposed “collaborative incubation, value retail, and internationalization” in 2019 strategy, it has successively acquired a number of international brands with profound heritage and differentiated positioning, forming three major brand groups:
Anta, Anta Children, SPRANDI, and AntapluS are the Professional sports brand group mainly
Fashion sports brand group mainly composed of FILA, FILAFUSION, FILAKIDS and KINGKOW
Outdoor sports brand group represented by AMER SPORTS, DESCENTE and KOLON SPORT
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