Inventory Drag On Local Sports Brand Performance Growth &Nbsp; Shop Layout Overall Slowdown

Lining recently released his 2011 performance report.

At this point, China's local sports brands all handed over last year's "report card".

Data show that China's local sporting goods market has experienced a rapid growth period of 30% in the past few years, and in 2011 it ushered in a comprehensive adjustment period.

Lining, Anta, PEAK, and China have all seen varying degrees of decline in performance or a sharp slowdown in growth.

Data show that the substantial increase in the amount of inventory became China last year.

In addition to the high inventory problem, throughout 2011, reporters also found that the growth rate of China's local sports brand stores slowed sharply last year.

The annual report shows that Lining, Anta, PEAK last year, the number of stores was 340, 229 and 582, far lower than the past few years each brand of nearly 1000 new stores, Kappa brand is the first time the number of shops showing a negative growth rate, down 16.8%

For this year's brand development, almost all Chinese sporting goods brands will clean up inventory and Olympic strategy as the primary objective this year.

Inventory dragging down the growth of China's sports brand performance is urgent.

In March 29, 2012,

Among them, Kappa brand parent company China trend group sales decreased by 35.7% to 2 billion 740 million yuan last year, net profit dropped by 93% to 102 million yuan, and sales and net profit fell the most in China's sports brand.

Li Ning Co's sales fell by 5.8% to 8 billion 929 million yuan in the throes of pition, while net profit dropped by 65.16% to 386 million yuan.

In addition, the relevant announcements issued by Anta and PEAK also showed that there was a certain degree of decline in net profit growth.

As for the decline of performance, almost all the local sporting goods brands in China indicated that the inventory amount of Lining group was 1 billion 133 million yuan last year, up 40.57% from the same period last year, compared with the 806 million yuan in the same period last year. The stock of PEAK increased from 335 million yuan at the end of 2010 to 421 million yuan, an increase of about 25.67%.

For the impact of inventory on enterprises, Lining, chief financial officer and executive director, Zhong Yiqi, said at the annual performance press conference that "Lining is indeed experiencing a very serious inventory problem". Affected by this, Lining group's sales in the first quarter of this year showed a negative growth trend.

He expects that inventory will affect Lining's annual performance this year, and Lining group's sales will again show low unit growth this year.

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He said that clothing enterprises are different from other enterprises. If other enterprises find inventory problems, they can stop importing raw materials, suspend production, clean up their stock, wait until the stock returns to normal level, and then re engage in production.

Because clothing companies have to adapt to the needs of consumers and constantly introduce new products, it is impossible to stop importing raw materials and suspending production. The result is that the amount of inventory is increasing.

Li Guangdou, a well-known brand expert, also pointed out to reporters that "the phenomenon of high volume shipments reflects the failure of the business strategy of enterprises". In the process of handling inventory, enterprises must choose a substantial reduction in prices, so it is difficult to recover the previous target cash flow, resulting in a loss of performance.

However, compared with China's local sports brands in the "stock mire" unable to extricate themselves, the world famous sports brand Nike ADI's performance is very good.

Nike's latest report shows that benefiting from strong sales growth and new orders increase in North America and emerging markets including China, the net profit for the current period was 560 million US dollars, an increase of 7% over the 523 million US dollars in the same period last year, and the value of the order in this area increased significantly. Adidas's revenue last year was 13 billion 344 million euros, an increase of 13% over the same period last year, of which sales in the first 9 months increased 28% in China.

The huge contrast between Chinese and foreign sports brand performance and the tremendous impact brought by inventory on the enterprise have made Chinese local brands focus on "saving" as the focus of this year's work.

Lining, Anta, PEAK, China's trend coincide in the report pointed out that this year's main target will be to ease the inventory pressure on the retail side, and clean up inventory.

Lining, chief financial officer and executive director Zhong Yiqi, pointed out that Lining will increase wholesale discounts for dealers this year, actively take inventory repurchase measures, and increase factory stores, discount stores and enhance sales of network platforms.

Traditional business encounter "ceiling" shop layout overall slowdown

In addition to the high inventory problem, throughout 2011, reporters also found that the growth rate of China's local sports brand stores slowed sharply last year.

The annual report shows that Lining, Anta and PEAK last year added 340 new stores, 229 and 582, which is far less than nearly 1000 new stores in each brand in previous years, such as Anta's 858 new stores in 2010, 666 new stores in 2010 by Lining, and 1018 new stores in PEAK in 2010.

The trend of Kappa brand's parent company is "the first time".

Data show that as of the end of 2011, the number of stores in China was 3119, a decrease of 632 from 3751 at the end of last year, a decrease of 16.8%.

In addition, the annual report also shows that since the second half of last year, a number of Chinese local sports brands have entered the "closed shop stage".

Anta added 229 new stores last year, but the semi annual report submitted by its company last August showed that as of June 30, 2011, the number of stores in Anta has increased by 295.

It can be seen that conservative estimates, excluding the second half of the Anta group's new stores, Anta last year, the number of Chinese stores close to 100.

PEAK also said that this year will continue to implement the strategy of "opening large stores and closing stores to further enhance the average sales area of retail outlets".

China's local sports brands have made different statements to the slow growth of stores and even negative growth.

China trend group, the relevant person in charge, pointed out to reporters that under the environment of the sports goods market downturn, China launched the policy of integrating the store network, and agreed that the distributors closed the stores with unreasonable distribution and poor profit in the year, which helped the group concentrate its resources on the stores with higher efficiency, and improved the overall sales efficiency and the profit margin of the dealers.

Before the Li Ning Co CEO Zhang Zhiyong word interview, he also pointed out that the employment cost of sporting goods retail stores increased, and the rent of urban commercial areas increased substantially. Overall, enterprises had reached the ceiling by expanding the number of stores to increase their performance. It is a necessary measure to enhance the output efficiency of existing stores.

"For PEAK, this year is a year of adjustment," Liu Xiang, PEAK's public relations director, said in an interview. "On opening up strategy, PEAK will open larger retail outlets and close more smaller and less efficient retail outlets through distributors and retail outlets operators".

In response, Zhang Bin, a senior analyst at the national textile and securities industry, told reporters that the growth of China's local sports brands in the past few years could be likened to the "brutal growth" of the "big pie" style. The rapid growth of business performance was stimulated by the large number of stores and intensive advertising bombing.

"At that time, the sports goods market in many parts of China was still a blank area. Relying on a large number of new stores, these Chinese sporting goods brands have indeed made brilliant achievements in those years."

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"But with the gradual saturation of these markets and the gradual maturity of Chinese consumer psychology, the difference and specificity of sporting goods are gradually becoming apparent. Consumers will measure the use, brand and price of products before buying them."

Zhang Bin pointed out that in this case, China's local sports brands still attach importance to the increase in the number of stores, which is both a strategic deviation and a helpless move. "If you open a shop, you will have a loss of stores, and you will gradually lose market share and be abandoned by consumers."

He also pointed out that after the number of existing stores reaches a certain level, the expansion of channels will encounter bottlenecks. It will be difficult to maintain a relatively fast growth in the case of single store profits.

For this year, the growth rate of China's sporting goods brand stores slowed sharply, or even negative growth. Li Guangdou, a famous Chinese brand expert, pointed out to reporters that the whole retail industry encountered problems of rent, manpower and rising cost of raw materials last year.

In terms of local sports brands, the profitability of single stores has not been effectively improved. Therefore, it is reasonable to close some shops with poor performance when the number of stores is not up to expectations.

"Especially since last year, the commercial real estate has been rising strongly, the rents of urban commercial areas have risen sharply, and the labor costs of sporting goods retailers have increased, so that the performance of enterprises can't be easily realized by expanding the number of stores in the past few years."

Cleaning up inventory will be the primary goal this year.

After a year of last year's brand performance in China's local sports brand, almost all Chinese sporting goods brands gave the same answer to this year's brand development, which is to clean up inventory and Olympic brand marketing.

Lining's group said in its earnings report that this year the company will further clean up the retail end inventory and improve cash turnover.

Lining, chief financial officer and executive director, said at yesterday's performance briefing that the group will add 200 factory stores and discount stores this year to speed up the inventory clearance. It is expected that the proportion of sales channels will increase by 4 percentage points to 15% this year, and the inventory is expected to return to a composite level at the end of the year.

"General stores offer a discount rate of about 24% to 25%, while the discount rate for factory stores and discount stores is 50% to 53%.

In the first quarter of this year, factory store sales increased by 45%, helping clean up inventory.

Lining, chief executive officer and chief executive of Zhang Zhiyong, also pointed out at the performance conference that he hoped that the proportion of retail channels in retail channels rose from 11% last year to 15%, improving cash flow and returning stock to a reasonable level.

China trend group expects that by international brands such as ADI and Nike, the competition for China's two or three tier city market will gradually sink. The competition in China's sporting goods market will become more intense. The inventory pressure on the retail side of the group will still be very serious this year.

The main goal of this year's trend is to clean up inventories, and hopes to digest huge inventories through the use of existing network sales platforms, the report said.

In addition, this year's Olympic marketing is also regarded as the top priority of China's sporting goods brands this year. Lining, chairman of the board of directors of Lining group, pointed out in an email to reporters that it was promoted by the 2012 London Olympics, and the Chinese sporting goods industry is expected to maintain steady growth in 2012.

According to the reporter's financial understanding, the Olympic year has been a year for the sporting goods brand to exert all their strength, and also a year for the sports brand "bumper harvest". At the 2008 Beijing Olympic Games, Lining, as a representative of Chinese athletes, lit the Olympic torch on the "bird's nest" sky over Beijing, and pushed the development of Lining's sports brand to the peak. In the next two years, Lining's sales performance rose sharply, and the sales volume in the Chinese market once exceeded the world famous sports brands such as ADI Nike.

Li Ning Co stressed to reporters that this year's London Olympic Games will be an important market opportunity. Lining will seize this opportunity to enhance the brand image. The Olympic strategy will be Lining's "core work of the year".

Anta also pointed out in its annual report last year, "because the London Olympic Games will be widely concerned in China, our strategic partnership with the Chinese Olympic Committee will be an effective growth enthusiast's passion for Anta."

At the same time, Anta also said that due to the huge potential of the London Olympic Games, the company will launch a series of Olympic themed marketing activities to enhance the influence of Anta brand and products.

The Olympic year and Olympic marketing, which are highly concerned about Chinese local sports brands, give different opinions.

Li Guangdou pointed out to reporters that the Olympic cycle of sports brand is generally 4 years and a cycle. Although the "Olympic year" will play a certain role in promoting the brand of sports brand, the Chinese sporting goods brand is still in the "adjustment stage" of the brand. There are still many problems to be solved in its own brand building, and it is not wise to rely too much on "Olympic marketing".

Zhang Bin, a senior analyst at the national textile and securities industry, also said that the so-called "Olympic strategy" of China's local sporting goods brands would be difficult to become a "life-saving straw".

China's local sporting goods brands are currently adjusting their business strategy. This adjustment cycle can not be completed in one or two years. When the problems are not solved, it is somewhat inconsistent with the fact that the hope is only placed in the Olympics.

In addition, he also pointed out that this year's Olympic Games will be held in London, and the previous Beijing Olympic Games have a huge difference in geographical location, which will be another major factor restricting the results of the implementation of the Chinese local sports brand Olympic strategy.