Are Anta And Lining'S Worries About Rivers And Lakes Returning Together?

Is the spring of sporting goods coming?

Anta's recent earnings report seems to be hinting at this.

In February 26th, Anta group announced its 2018 annual report in Hongkong.

In 2018, Anta group earned 24 billion 100 million yuan, an increase of 44.4% over 2017.

Group gross profit for the first time over 10 billion, reaching 12 billion 690 million yuan, operating profit of 5 billion 700 million yuan.

Meanwhile, Anta's colleague Lining is launching a new trend of domestic products in the industry. Not long ago, the logo and "line" theme of "China Lining" in New York fashion week aroused heated debate.

At the close of March 5th, Li Ning Co's share price was HK $11.32 / share, compared with the October 11, 2018 low of HK $6.33 / share, or nearly 80%, a record high in the past 8 years.

The two big domestic industry giants are moving forward collectively, but are still facing different concerns.

Mutual love and killing: the growth road of Anta and Lining

In 1981, in Jinjiang, Fujian, Ding and Mu changed the seller's property and borrowed money and opened a partnership shoe workshop.

In 1987, Ding Shizhong, a 17 year old son of Ding and mu, came to Beijing alone and succeeded in putting his shoes into the mall with his perseverance and toughness.

In 1991, the father and son two people relied on Ding Shizhong to break through the achievements of Beijing for 4 years, and opened their own shoe factory. For the first time, they hung the sign of "Anta".

In 1988, Lining, the gymnast prince, announced his retirement to join Guangdong Jianlibao group. Lining's endorsement of the advertisement made the sales of Jianlibao up 30 million. The abundant capital of Jianlibao decided to introduce foreign capital and Lining to make clothes together. They seized the opportunity of the Eleventh Asian Games torch relay to let Lining's clothing fire, and the "Lining", invested by Jianlibao, was formally established in 1991.

Since then, the two major brands have begun their own development. Anta gambles Kong Linghui, endorsement CBA, and Lining relies on their own fame to publicize and sponsor the Olympic Games. Anta and Lining, who are very different from each other, are relying on endorsements to improve their reputation and increase sales volume while developing their main businesses.

In 2010, Lining's revenue amounted to 9 billion 450 million yuan, and Adidas, which accounted for more than 9.5% of the 9.7% market share, leapt to second in the country, 4.1% lower than 13.8% of Nike, while Anta's market share was only 8.2%.

Since then, Lining, who is at the top of the industry, has decided to open up the internationalization process, set up a high-end image, enter the first tier cities, compete directly with the international front line, and has announced 3 successive price increases of 7%-17.9% for footwear and clothing products, and tries to create a younger image.

The turning point between the two took place in 2012.

From 2010 to 2012, after the crazy expansion, the domestic sports shoes and clothing industry began to stock up, and both performances fell off cliff style.

After raising the price, Lining is facing the embarrassment that consumers in the first tier cities despise and consumers in the two or three tier cities can not afford to buy.

Anta still maintains the positioning of consumers facing the three or four line, while the inventory and capacity war also makes it aware of the unsustainability of the traditional wholesale mode.

In 2012, Anta moved from wholesale to retail mode for the first time. Direct control of stores reduced its cost of wastage, and reduced the turnover days of accounts receivable and inventory turnover days to the lowest level in the industry, thus improving operational efficiency.

Anta's strategy also showed its effect. In 2012, Anta curved overtaking, surpassing Lining's 6 billion 740 million yuan scale of revenue by 7 billion 620 million yuan, and then began to go all the way to its success, leaving Lining to become the first domestic product.

In 2013 ~2017, the market share of Anta increased in the range of 7.0%~8.0%, while Lining remained in the range of 4.0%~5.5%.

In 2015, Lining reorganized the brand and positioned the company as "Internet + sports life experience provider". After catching up with Anta through electricity business, incoming women and children's market, it successfully created a net profit growth rate of 66.79% in the first half of 2016.

And in 2016, Anta put forward the 10 year strategy of "single focus, multi brand and all channels". Through mergers and acquisitions, the contribution of FILA to acquisitions has become increasingly prominent.

According to the mid-term report in 2018, Anta's turnover of 10 billion 554 million is still far ahead of that of Lining's 4 billion 713 million.

Anta VS Lining: is it the same way?

For sporting goods, profit growth is undoubtedly the ultimate goal, but their strategies are different.

Judging from the development of its brand, Lining's current revenue is still more dependent on its main brand of Lining. Although since 2005, Lining has actively acquired sports and outdoor sports brands such as red double happiness, Lotto, Ai Gao and Kasen, but these acquisitions have diluted Lining's brand concept and made the brand positioning more ambiguous.

From the chart below, we can see that in the brand of Lining, the other brands accounted for a relatively small proportion of revenue, and declined significantly after 2014. As of the end of 2017, all other brands accounted for less than 1% of the total revenue.

In addition to the main brand, Anta acquired FILA has become the main driving force for its performance.

Since its acquisition of FILA in 2009, Anta has acquired brands such as KOLON, Sprandi, Descente, Kingkow and so on. As of December 31, 2018, the number of stores was 117, 181, 104 and 77 respectively.

FILA is particularly prominent, and by the end of 2018, its stores had reached 1652.

From the earnings data, Anta's clothing sales in 2018 were 14 billion 709 million yuan, accounting for 61%, an increase of 61.4% over the same period last year. According to the results, this outstanding achievement is mainly contributed by FILA.

From the strategic layout of the two companies in the high-end field, Anta's main brand has always maintained the public positioning, with three or four line consumers as the main audience, but Anta has not given up the high-end layout.

Anta mainly acquired high-end layout through its acquisition. In its acquisition brand, FILA China is positioned as a high-end sports and fashion brand, with a history of over 100 years, mainly in a second tier city. The Japanese brand DESCENTE is a high-end sports apparel brand, known for its professional skiing sporting goods, while KINGKOW is committed to high-quality clothing for children.

The acquired brand can be distinguished from its own brand, which helps maintain high price and make use of the popularity of the original brand.

In 2010, Lining put forward the strategy of high-end strategy, rebuilt the brand, and positioned the strategy to compete directly with the international first-line brand, ADI and Nike, and raised the price three times.

But Lining's brand value and product quality are lower than that of international brands with the same price range, and can not get the favor of consumers in the first tier cities. At the same time, Lining has lost the price performance after the price rises, and the original three or four line price sensitive consumers have turned to Anta, 361 degree and other cost-effective cards.

Lining inventories are not clear.

However, in recent years, Lining has begun a new high-end attempt after his performance has improved.

Since 2018, Lining has participated in the three international fashion week to carry out marketing campaigns, helping to expand the high-end stores in the European and American markets, and enhance the brand image in the eyes of Chinese people.

After working with Tmall in New York fashion week in February 2018, Lining's new sweater sells for about 700 yuan, and many fashion week products are in short supply.

On this year's fashion week, Lining's shares closed up 2.55%, the highest closing price since July 2011.

Warmer and warmer: Anta and Lining's worries

Facing the future, these two domestic sports brands are still facing different concerns.

The total price of Anta's acquisition of Amer is 4 billion 660 million euros (35 billion 504 million yuan). According to its 2018 earnings report, Anta has cash and cash equivalents of 9 billion 283 million yuan, which exceeds 807 million yuan in March. The acquisition means a higher leverage ratio, and the acquisition has an impact on dividend payouts, and the dividend payout is reduced to HK $28 per share of ordinary shares, 44.9% of shareholders' profits.

On the other hand, whether Anta can digest Amer well is still doubtful. Anta President Zheng Jie said that all Amer brands are small in China, so the biggest synergy effect is in China.

In the view of brand founder Cheng Weixiong, Anta's international operation team is not yet available, and too much brand expansion is concerned about Anta's digestion capability.

For Lining, its high-end and a new round of brand diversification are just beginning.

Its US professional dance brand Danskin, as of the end of June 2018, only 10 outlets, still need to improve product mix and enhance the terminal shopping experience.

In the fashion week, the "Chao Lining" of China has opened a franchise store in Beijing and Shanghai.

According to the 2018 semi annual report, Lining YOUNG in 2018 is the product, channel, marketing and other aspects of the building system and comprehensive operation of the year, its follow-up sales effect remains to be seen.

In addition, in the process of both high-end and international development, they will also face challenges from foreign brands such as Nike and Adidas. We will wait and see what the fate of both of them is in the arena of sports capital.