Sports Brand Financial Report -- Anta Li Ning Is Booming

Lululemon takes the lead Anta Li Ning is gaining momentum

Lululemon, which has entered from the subdivision track, has surpassed the double giants of Nike and Adidas.

Recently, Canadian sportswear brand lululemon released its second quarter financial report in 2022. As of July 31, 2022, lululemon's revenue in the second quarter of fiscal year 2022 increased by 29% over the same period last year to $1.9 billion and net profit of $289 million, according to the financial report.

Lululemon has developed steadily in the mainland China market. Its net revenue increased by more than 30% year-on-year, and the three-year compound annual growth rate was close to 70%. As for the development of the Chinese market, lululemon mentioned in April this year when it announced the "power of three x2" five-year development plan that mainland China would become lululemon's second largest market in the world by 2026.

In contrast, as foreign players, Nike and Adidas have been declining in the Chinese market.

In the Greater China market, Adidas's revenue has fallen for five consecutive quarters, and Nike's has fallen for three consecutive quarters. According to previous reports, Adidas chief executive Robert Roth has revealed that he has made mistakes in China and will leave office early next year, three years earlier than the end of his original term.

As a matter of fact, the competition pattern of China's sports market has already changed by combing the 2022 half year reports of Anta Group, Li Ning, Tebu, 361 degree and other domestic sports enterprises.

The most striking point is that Anta Group's revenue in the first half of the year surpassed that of Nike China for the first time.

Anta Group's financial report shows that in the first half of 2022, Anta Group realized a revenue of 25.965 billion yuan, a year-on-year increase of 13.8%. According to the data provided by Anta Group, its revenue volume in the first half of the year is equivalent to 1.1 Nike China, 2.1 Li Ning Company and 2.13 Adidas in the same reporting period.

Li Ning and Tebu also handed in a good report card. In the first half of 2022, Li Ning's revenue and profit increased by 21.7% year-on-year to 12.409 billion yuan; Tebu's revenue increased by 37.5% to 5.684 billion yuan, with a net profit of 590 million yuan, a year-on-year increase of 38.4%.

The situation of sportswear brand players is changing quietly.

Adinike has been robbed of the limelight

On the first half of the year, an group reported its operating revenue of RMB 2.025 billion; Li Ning, which ranks behind Anta, had a revenue of 12.4 billion yuan in the first half of the year; In the first half of the year, Tebu, the third place, had revenue of 5.68 billion yuan; The fourth is 361 degree, with revenue of 3.65 billion yuan.

In contrast, Anta Group is firmly in the first place in the domestic sports market, and also surpasses the performance of Adidas international sports brand in the Chinese market. Data shows that Adidas' revenue in the first half of the year in Greater China was 11.785 billion yuan.

Anta said its revenue in the first half of the year was equivalent to 1.1 Nike China and 2.13 Adidas in the same reporting period.

From the perspective of the whole sports market, compared with the Chinese enterprises with continuous breakthrough in revenue, international sports brands have encountered "acclimatization".

On August 4, Adidas disclosed its performance report for the first half of 2022. The revenue of Greater China region was 1.723 billion euro, a year-on-year decrease of 28.4%. After excluding the exchange rate factor, the revenue of Greater China region decreased by 34.8% year-on-year.

This is the fifth consecutive quarter of decline in Adidas Greater China. In addition to Adidas, Nike has also declined for three consecutive quarters.

According to the magic mirror market intelligence data, from March 2021 to July 2022, among the head overseas sports brands, the sales of Adidas taoseries e-commerce platform increased negatively for one month year-on-year, while the sales of Nike taoseries e-commerce platform showed a year-on-year negative growth for 12 months.

However, lululemon, with its yoga pants, is a rare exception. According to magic mirror data, lululemon has been selling well on Taobao and tmall platforms since 2020. According to the magic mirror white paper released recently in the first quarter of 2022, lululemon's sales on Taobao and tmall platforms in the first quarter of this year reached 560 million yuan, up 82.1% year-on-year.

At the same time, the financial report shows that lululemon's revenue and net profit are on the rise in the second quarter of fiscal year 2022, with a year-on-year growth of 29% and 39.42%. Overall, compared with Nike and Adidas, lululemon, which focuses on yoga pants, has some advantages in terms of revenue growth and net profit growth.

Yang Dayun, a strategic expert in China's clothing industry, told the times weekly that from the overall performance in the past two years, the sports market demand tends to be saturated, and the growth trend of Nike and Adidas, which originally accounted for a relatively high market share, has declined in the normal range.

Yang also added that the rise of domestic sports brands in China's consumer market also affected the performance of Adidas and Nike. With the improvement of design ability, level and brand promotion ability of Chinese local enterprises, the advantages of Nike and Adidas will be gradually compressed.

"We don't know enough about consumers, so we've left room for Chinese competitors to do better," Adidas chief executive Robert Roth admitted in a media interview

"Today's Chinese consumers like (products) to have a kind of 'Chinese feeling'. Adidas will definitely study and try to find solutions to find the feeling of Chinese consumers. Although it is difficult, it should not be an unsolvable problem for international famous brands." Mr Roth said.

Darcy Jupp, an analyst at global data apparel, said Adidas had lagged behind its competitors and offered few products, and its strategy of relying on Chinese sales to expand was hampered by the current situation in the Chinese market.

However, it should be noted that the statistical cycle of Nike's financial report is different from that of other brands, and there are time differences.

The performance of Anta Group, Li Ning, Tebu and Adidas in the first half of the year is from January to June 2022, while Nike uses the data of the third and fourth quarters of fiscal year 2022, that is, December 2021 to may 2022.

According to this data, Nike's revenue in Greater China was $3.721 billion, compared with $23.681 billion at the exchange rate on the day of the performance announcement. But this does not include the revenue of the 6.18 promotion, nor does it include the revenue of Nike's brand converse.

Still need to narrow the gap

Although the former big brother's performance in the Chinese market is weak, and the development momentum of domestic sports brands is relatively rapid, whether Anta or Li Ning, there is still a long way to go to reach the international famous brand.

Some people in the clothing industry told the times weekly that Anta is competing with Nike with the brand revenue of the whole group, which can not be regarded as "Surpassing" in the real sense. The multi brand operation ability of Anta Group is commendable, but there is still a big gap between Anta Group's single brand and Nike.

According to the "2022 World's top 50 most valuable clothing brands list" released by international market research organization brand finance, the brand value of Nike increased by 9% to $33.2 billion, ranking No.1. Adidas brand value ranked 5th, Anta 17th and Li Ning 44th.

In fact, Anta and other domestic brands are still facing their own problems to be solved.

For example, Anta Group has made a big breakthrough in revenue, but its net profit performance is not as good as other domestic brands. In the first half of the year, Anta's net profit was 3.95 billion yuan, down 6.6% year on year; The net profit of Li Ning was 2.19 billion yuan, up 11.6% year on year; The net profit of Tebu was 590 million yuan, with a year-on-year increase of 38.4%; The net profit of 361 degree was 550 million yuan, with a year-on-year increase of 37.2%.

At the same time, Anta Group's FILA brand performance began to decline.

In the first half of 2022, the revenue of FILA brand reached 10.78 billion yuan, down 0.5% year on year; Operating profit was 2.426 billion yuan, down 22.8% year on year.

Anta said that during the reporting period, the areas where the epidemic situation rebounded and closed stores were mainly concentrated in the first and second tier cities, and FILA was more distributed in these areas, so it was greatly affected.

"In fact, the growth rate of FILA has already slowed down for a long time, and it is no surprise that the decline in the first half of the year is not surprising. At the same time, the importance of FILA for Anta is self-evident. If the decline continues, it will be a great challenge for Anta." The industry reporter said to the times.

Whether Anta, Li Ning or Tebu, 361 degrees, there is still room for improvement in the basic research and development of domestic sports brands.

According to Anta's financial report in 2021, its R & D investment in 2021 accounted for 2.3%, while that of Li Ning in the same period was 1.83%, 2.5% and 4.16% respectively. However, according to relevant media reports, Nike and Adidas account for 5% - 10% of R & D. According to the report of prospective industry research institute, the total number of Nike's * * items has reached 4534, about 8 times of Anta's, and the number of * * items worth more than $5000 has reached 661, about 22 times that of Anta.

Domestic brands also recognize the importance of R & D, and constantly strengthen the professionalism.

On September 5, Tebu said that in the next 10 years, it will invest 5 billion to help China's road running industry, including product R & D and innovation, sports events and athlete support. Anta Group also predicts that the cumulative R & D investment will exceed 20 billion yuan by 2030.