In addition to Lululemon, which will release its 2022 Q2 financial report on September 1, the 2022 interim financial reports of major sports brands including Anta, Li Ning, Xtep, Adidas, and Puma have been basically disclosed in the past month.
With multiple financial reports in hand, brands will inevitably compare their gains and losses with each other. Anta has firmly established itself as the number one player in the domestic sports market with mid-term revenue of 25.965 billion yuan. In addition, in the past six months, the strict epidemic prevention policies in high-tier cities such as Beijing, Shanghai and Shenzhen, the tension in the global supply chain since the Russia-Ukraine conflict, and severe inflation in the European and American markets have caused the revenue of international brands in the Greater China market to show varying degrees of decline. Negative growth.
In the first half of this year, Puma’s revenue in the Greater China market fell sharply by 34%, Adidas fell by 35%, and has declined for five consecutive quarters, and Nike has also fallen for three consecutive quarters.
Compared with international brands, the situation faced by domestic sports brands seems to be better. Anta and 361 Degrees survived the cold winter at the beginning of the year, Li Ning began to make strides, and Xtep achieved the best performance of the brand in five years.
The joys and sorrows of the first brother in China
On August 23, Anta Group announced its results for the first half of 2022. The report showed that Anta achieved operating income of 25.965 billion yuan, a year-on-year increase of 13.8%. It continues to maintain its position as the number one player in the domestic sports market and widens the gap with domestic competitors. Li Ning, which ranked behind Anta, had revenue of only 12.4 billion yuan in the first half of the year. Xtep, which ranked third, had revenue of 5.68 billion yuan in the first half of the year, and 361 Degree, which ranked fourth, had revenue of 3.65 billion yuan.
If compared with international sports brands, Anta still seems to be ranked first in terms of absolute value. Adidas’s first-half revenue in Greater China was 1.723 billion euros, and Puma’s was 268 million euros. It is worth pointing out that the statistical time of Nike’s financial report is slightly different from other brands. The first half of 2022 for other brands is January-June 2022, which is equivalent to Nike’s second half of fiscal year 2022, which is December 2021-2022. In May, its revenue in Greater China was approximately 25 billion yuan. One of the statistical differences is reflected in the important promotion time of 618, so Nike is not very comparable.
Anta’s two major brands, Anta and FILA, are not in sync. In the first half of this year, Anta’s main brand and FILA revenue achieved 13.36 billion yuan and 10.78 billion yuan respectively, a year-on-year increase of 26.3% and -0.5% respectively.
In the first half of the year, FILA, which had been making rapid progress, lost its previous strong growth momentum, revenue fell slightly by 0.5%, and gross profit margin also fell from 72.3% to 68.6%, the first decline since mid-2021.
Compared with Anta’s main brand, FILA is not a brand that specializes in sports. Its products focus on casual fashion, and its positioning is different from Anta. In the first half of the year, due to the epidemic spreading in many places, FILA, which has a relatively high-end product line, was more obviously affected. It is reported that FILA had a store closure rate of 30% at its peak, making it the brand most affected by Anta’s internal business.
In the first half of the year, consumer demand for higher-end consumer brands such as FILA declined significantly. There are a large number of substitute products in the market, and people are more inclined to lower consumer grade to enhance their ability to resist risks. Although FILA’s design is outstanding, the quality of its products is not much different from its peers. A T-shirt costing several hundred yuan will inevitably be ignored by risk-averse consumers.
FILA accounts for half of Anta Group’s revenue. Due to concerns about FILA’s prospects, the capital market has doubts about Anta’s future performance. In response to market concerns, FILA stated that this year it will focus on “protecting health” and strengthen dynamic management in terms of products, brands, and retail dimensions, and strive to achieve more than 10% growth in the second half of the year and single-digit growth throughout the year.
Anta Group management also stated that from the global market perspective, few brands with a scale of more than US$3 billion can continue to maintain rapid growth. After FILA’s rapid growth in the past 5-6 years, FILA’s pursuit of growth rate in the future will give way to the emphasis and control of growth quality, refinement to create the ultimate product strength, heavy subdivision of categories, and accumulation of brand assets. . Anta will also explore the third growth line, such as the outdoor market.
Domestic brands open “midfield champagne”
In addition to Anta’s main brand, other professional sports brands have also withstood and digested the pressure of the epidemic to varying degrees. Li Ning’s revenue increased by 21.7%, 361 Degrees increased by 17.6%, and Xtep achieved the best performance of the brand in the past five years with a year-on-year growth of 37%.
On August 23, 361 Degrees disclosed its performance for the first half of this year. The report showed that the company’s operating income increased steadily by 17.6% to 3.65 billion yuan, gross profit increased by 16.6% to 1.52 billion yuan, and gross profit margin was 41.3%, which is basically the same as 41.8 in 2021. %be consistent.
361 Degrees’ brand positioning is very clear. 361 Degrees focuses on the third-tier and below markets, with 77.19% of the brand’s stores located in these areas. Amid the epidemic in many places in the first half of 2022, brands such as Fila, Li Ning, Adidas, and Nike, which have focused more on high-tier cities, are facing more severe challenges. The pressure on inventory and supply chains forces these companies to invest more energy in dealing with the epidemic. Related questions. As for 361 Degrees, which is laying out its plans for the sinking market, its revenue increased from 4.951 billion to 5.933 billion from 2012 to 2021. The growth rate is not large, but it can be seen that the growth rate of the brand in the first half of the year alone has been higher than that in the past few years. average situation.
Compared with 361 Degrees’ steady performance, Xtep’s performance in the first half of the year can be said to be high.� Currently, Lululemon has not yet challenged Adidas’ second place position. Lululemon’s semi-annual report was only released on September 1. According to its first quarter financial report for fiscal year 2022, in the first quarter, Lululemon’s net revenue increased by 32% to US$1.6 billion. . Adidas’s net sales in the first quarter of 2022 were 5.302 billion euros, but its growth rate was only 0.6%. The capital market is more optimistic about Lululemon’s business prospects and therefore gives a higher valuation premium. The focus of Lululemon’s new store layout this year is still the Chinese market. In the first quarter, sales in China achieved double-digit growth. Sooner or later, all major brands in the Chinese market will compete with each other.
As of 2020, China’s sportswear market has reached 315 billion yuan, and its proportion in the apparel market has gradually increased. As the sports market pie gradually grows larger, the distribution of the pie is also changing at the same time.
The market leader in 2021 is still Nike, followed by Adidas. However, a series of unfavorable factors in the first half of 2022 had a strong impact on the market in the short term, and international brands were generally hit hard.
It is foreseeable that due to the rise of the national trend and the effective implementation of the brand sinking strategy and transformation strategy, it is obvious that domestic brands will gain more market share in the short term. At present, many institutions are generally optimistic about domestic sports brands.
This epidemic has unknowingly changed the situation of sportswear brand players. However, it remains to be seen whether these impacts can truly change the market landscape.