Who Will Become The "Life-Saving Straw" Of Sports Brand?

Each Olympic Games is not only a feast for sports fans, but also a booster for some sports brands.

Due to expectation

The European Football Championship and other events will stimulate sales growth. Adidas, the German sportswear and equipment manufacturer, raised its annual performance target on Monday. Its net profit in 2012 will increase by 12% to 17%.

However, slowing growth and increasing inventories have become an unavoidable reality for the industry. Especially for domestic sports brands, it is hard to conclude whether the London Olympic Games can become their "life-saving straw".

Diminished profitability

although

In March, the 2011 growth rate recorded a record high growth rate. But for the 2012 performance growth target, Adidas was relatively cautious at that time. It is expected that revenue in 2012 will grow by 5%~9% and net profit will increase by 10% to 15%.

Nike's latest third quarter earnings report, released by Nike, the world's largest sports product company, showed a net profit of $560 million in the quarter, up 7% from 523 million US dollars in the same period last year.

Christopher Silvia, analyst at Sloan Hanna financial group, an investment company, points out that Nike's orders in Western European markets should benefit from the needs related to the European Cup and Olympic Games.

However, because of the rising cost of cotton, rubber and labor in China, the profitability of these sports brands is far from that of the previous years.

Earnings showed that Adidas's gross profit margin fell for the third consecutive quarter, down from 48.4% in the first quarter of 2011 to 47.7%.

Adidas's biggest competitor, Puma, also said last week that gross margins fell from 52.4% to 51.2% in the first quarter due to rising raw material costs.

At the same time, Yuyuan group, the largest OEM manufacturer of Nike and Adidas, has increased its net operating income in the first three months by 6.2% compared with the same period last year, but its long-term profitability is not optimistic.

UBS expects that Nike, one of Yuyuan group's main customers, will continue to keep prices down and the efficiency of new factories will take time. So the gross profit margin of Yuyuan group's OEM business will be reduced from 21% to 20.4% this year, and the profit forecast for next year will be reduced by 16% and 8% respectively.

Domestic brands start "Olympic Games"

Not only foreign brands,

The degree of dependence on the Olympic Games should not be underestimated.

The 2008 Olympic Games in Beijing made many sports brands in China full of money. The annual report shows that Anta's operating income in 2008 increased by 54.80% compared with the same period last year, and its gross profit grew by 84.90% over the same period last year. Lining's operating income increased by 53.80% in 2008, gross profit increased by 54.60%, and the sales volume of 316 2008~2009 increased by 161.70%, and gross margin rose 8.2 percentage points to 34.60%.

Anta stressed in its 2011 Annual report that in 2012, Anta group will launch a series of marketing activities focusing on the Olympic Games.

Its advertising and publicity expenses accounted for 13.7% of the total turnover in 2011, up 0.1 percentage points over the same period last year, hitting the 13.8% highest point in 2008.

Lining executives also said earlier that the most important work in 2012 was the Olympic strategy. Last year, Lining, whose net profit fell by 60%, had successfully grabbed the sponsorship of the five Olympic teams in gymnastics, diving, table tennis, shooting, badminton and so on.

However, unlike the Beijing Olympic Games, the London Olympic Games lacked home advantage for local brands. In 2011, the annual report showed that Anta's overseas market accounted for only 1.2% of the total turnover. Lining's turnover in the international market in the first half of 2011 accounted for only 1.7% of the total turnover, and its offshore market was mainly concentrated in Eastern Europe, the Middle East and Southeast Asia.

Qiu Li Jin, who studies sports marketing and sports sponsorship at Fudan University School of management, said that the outstanding performance of domestic sports brand performance in 2008 was the positive impact brought by the Olympic Games itself, not the marketing strategy of these brands.

If you want to have a share in the London Olympic Games, local sports brands will face more challenges.

Many Chinese brands believe that sponsoring a certain event and making use of advertising can achieve the desired effect. In fact, the mature sponsorship theory requires enterprises to have 1 times to 3 times of capital in addition to sponsoring their own funds, and prepare for another marketing to enhance this effect. Finally, the local sports brand should also consider whether there is enough professional ability to do well in the whole sponsorship so as to maximize output.

Ding Shuibo, President of XTEP, told reporters that due to the relationship between time difference and so on, the London Olympic Games could not be compared with the Beijing Olympic Games. Moreover, four years ago, China's sports market was just excited and even overdrawn.

"XTEP will also invest, but the intensity must not be compared with that of four years ago."