Three Times A Year Is Short, Anta Is More And More Brave.

After experiencing the short blow of "three times a year", China's largest sporting goods group Anta What is the market performance? Is it worse or worse?

In the afternoon of August 26th, Anta group released the mid term financial results in 2019. In 2019 1~6 months, Anta group's revenue was 14 billion 810 million yuan, up 40.3% over the same period. So far, Anta has increased by 40% over the past two years. In addition, Anta also released the FILA business data for the first time. In the earnings period, FILA achieved 6 billion 538 million revenue, up to 80%, gross profit up to 4 billion 673 million, accounting for 44.1% of Anta group's total revenue, and nearly 10% higher than the same period in 2018.

Even though Anta officials have always stressed that the disclosure of FILA's performance has nothing to do with the market voice. But in the eyes of more people, Anta's move is aimed at stabilizing the doubts brought about by muddy water shorting. In July 2019, muddy water issued 5 short reports in a row, focusing on FILA's data fraud.

"We have been attracting much attention in the past year, but investors are still very rational." Zheng Jie, President of Anta group, responded to "Chinese entrepreneur". He stressed that Anta is not a recruits of a listed company. It has a history of 12 years from 2007 to now. As for short selling, Anta's stock price has not been affected, but it has been constantly innovating. The core reason is that Anta has adopted the management mechanism that fully complies with the listing rules since the first year of listing.

"No matter the rigour and accuracy of data presentation, or the SFC rules that need to be observed in daily work, Anta has done it, and at every stage we strive to do our best, and 100% meets the requirements of listing management. In the past 12 years, whether it is the Chinese newspaper or the annual report, it has brought the most realistic return to investors. Capital can also see Anta's contribution to the whole society with a very rational vision and analysis. Zheng Jie said.

According to the data released in the earnings report, Anta's brand and FILA's half year sales exceed Lining's, but the growth rate of Anta's brand is slowing down. That is to say, even if we hold the trump card of FILA, Anta will still need to change.

In the interview, Zheng Jie talked about Anta's future development plan, and responded to the progress of Amer Sports's acquisition at this stage.

FILA is the strongest, and this brand is the most profitable.

Before buying FILA, Ding Shizhong (Anta Group Chairman and CEO) probably never thought that the leisure brand from Italy could be so attracted. In the half month since July 8th, muddy water has issued 5 short reports for Anta, pointing out that Anta sports counterfeit the financial data of FILA, claiming Anta will turn wholesalers into direct stores.

Anta denied this. In the performance communication conference, Zheng Jie also talked about FILA's direct battalion mode. "Compared to the distribution and wholesale mode of Anta brand, FILA brand is mainly operated by direct operation. In the first half of this year, FILA brand opened its main stores and comprehensive stores in key core cities, and was among the top selling brands in the same category. These big shops opened by FILA brand make the concept of high-end sports and fashion popular among the people.

Meanwhile, FILA's super high gross margin in the first half of the year has also attracted the attention of the industry. After all, such a high gross profit margin is extremely rare in the clothing industry. Meanwhile, the gross profit margin of Anta's main brand is 42.5%, Lining is 49.7%, Nike is 44.7%. From the perspective of overall revenue, FILA has also surpassed Lining for the first time and has become the second largest brand of domestic sporting goods.

As for the rapid growth of FILA, Anta attributed it to three points: brand awareness and market awareness of products, strong performance of retail business, increase of physical stores and improvement of store efficiency, and development of e-commerce. According to Anta's expectation, in 2020, FILA's revenue will exceed Anta's own brand for the first time and become Anta's largest growth engine.

Why do we choose to publish FILA's revenue data at this time? Zheng Jie once said at the interim results conference, "there is no counterattack. FILA has accounted for more than 40% of our business. We feel it is our duty to show investors more clearly."

Different from muddy water's query to FILA, most people in the industry have witnessed the development of FILA. The high growth of FILA is not achieved overnight. In the memory of Ma Gang, a garment analyst, the running of Anta and FILA brands lasted for 3~4 years.

In August 2009, Anta took the FILA's right to operate the Chinese market from BELLE at 325 million of the price. At that time, the acquisition was also seen for a while. Immediately, Anta picked Yao Weixiong from the crocodile company (currently vice president of Anta group and fashion sports brand CEO), hoping to build this high-end brand with a completely different team and mentality.

In 2011, FILA made a strategic change in the Chinese market, that is, brand positioning "return to fashion", and made corresponding adjustments in product design, sales channels, supply chain and marketing, and made efforts to match the high-end consumers in the second tier cities. From the perspective of market response, the positioning of Anta's brand is also the real reason for the success of FILA, that is, a strong complementary relationship with Anta brand.

The key road CEO Zhang Qing also believes that the success of FILA lies in the two major fields spanning "fashion" and "Sports". Even at this stage, no brand can compete with it.

But it must be noted that the gross profit margin of FILA is high, but the rate of interest rate is low, only 29%. In this regard, Zheng Jie said in an interview that this is mainly due to the "FILA direct mode of operation costs higher." That is to say, although the growth rate of FILA is fast, it is not as good as Anta's "wholesale" brand. What is the current development of Anta brand?

From the current data released, Anta's brand (including Anta children) revenue although leading, but the growth rate slowed down compared with the same period, which is also the first reaction of Ma Gang after seeing Anta's earnings report. According to Ma Gang's analysis, this trend will continue. That is to say, the growth of FILA in the second tier cities will be faster and faster. The Anta brand in the two or three tier or even lower tier cities will become slower.

"After all, Anta is the brand name of the group. The development of this brand will directly affect the image of the whole company. How to grasp the balance between the brand and the acquisition brand is a problem that Anta always needs to think about."

The "internal moving knife" before the acquisition of Amer

Anta has divided its development into four stages: 1 factory manufacturing started; 2 through CCTV5+ sports star endorsement marketing mode on the branding road; 3 from brand wholesale to brand retail transformation, requiring dealers to carry out retail management according to Anta standard, Anta at this stage in the channel inventory crisis in a timely manner exceeded the Lining; the 4 stage is multi brand development.

In the 4 stage, Anta always hopes to replicate the success of FILA and accelerate the pace of brand acquisition in the later stage, including Korean outdoor brand KOLON, mountaineering brand Sprandi, winter sports brand DESCENTE and children's wear brand Kingkow.

In March 2019, another merger case of Anta caught the industry's attention. In April, Anta group formally announced that it had completed the acquisition of Amer Sports with numerous management partners, and the purchase price was as high as 4 billion 600 million euros. And muddy water, or because of this, chose to concentrate on short selling Anta in the first half of the year. This "China Unicom" may think that Anta can not save the "crisis" of the capital market in the short term after buying Amer at a big price.

However, judging from the current earnings report released by Anta, muddy water underestimated the financial strength of the "Ding family". Of course, at present, Anta group also has financial statements with AmerSports.

Zheng Jie once told Chinese entrepreneurs that Anta's board of directors and management have come up with the Amer's five year development strategy, hoping to gradually achieve the goal in the future. "At present, we are making a detailed management plan for Amer. Amer Sports is a group with seven different brands including equipment, equipment and watches. We will report more details to you when the time is right."

The general view of the industry is that Amer Sports will not bring huge profits to the group, but Anta has built a more mature platform for Amer. Anta has made preparations for the acquisition of Amer. At this earnings conference, Ding Shizhong also said: "2019 is the year of Anta group's synergy." How to understand synergetic value? In the eyes of more people, it should be the brand integration of "1+1 is greater than 2".

In April 2019, the announcement of the acquisition of Amer in the same period, Anta group has completed a low-key restructuring of the organizational structure. At present, the Anta group's organizational structure is: professional sports, fashion sports and outdoor sports three brand business groups.

Among them, the professional sports brand includes Anta's main brand Anta, Anta children, AntapluS, Sprandi, and is responsible by Wu Yonghua, the executive director and sales manager of Anta. In the professional brand group, basketball, comprehensive training, running and sports life will become a separate category of business departments.

In addition, the fashion sports brands include FILA and FILA children, which are also divided into FILA fashion movement, FILA trend and FILA professional movement, led by Yao Weixiong, President of the Greater China region. Outdoor sports brands include DESCENTE, KOLON Strategy Department and Amer Sports, and are fully responsible by Zheng Jie.

Besides, there are related design, brand and marketing functions in three business groups. In addition to the three major business groups, there are also four independent Co ordinating departments established by the group, including sales, procurement, production and electricity suppliers. All departments are still reporting to Ding Shizhong.

For Anta, this structural adjustment is definitely a big "operation". After Anta's acquisition of Amer Sports, Anta's brand will also exceed 15, and only a more efficient way of operation will enable Anta group to operate effectively. In Ma Gang's view, if the future is long enough, the two sides will merge very well.

Upcoming sports year

To be sure, Anta must find new growth points. Besides FILA, Anta's other brands are not known to the public. Earnings data show that in addition to FILA and Anta brand, Anta's remaining brand revenue is 683 million, an increase of 36.2%. Within its many brands, the growth of DESCENTE, a high-end winter sports brand founded in Japan, has doubled.

In this earnings conference, Zheng Jie also revealed that DESCENTE will make profits in 2019, and is expected to become another brand of over 1 billion of the whole group in the whole year, and Anta is also continuing to overweight the sports ice and snow industry.

From its inception, Ding Shizhong wanted to build Anta into a national sports brand. Earlier, insiders also told entrepreneurs in China that there was a dispute about whether the brand should be "market upwards" in Anta. But judging from the current decision of Anta group, this brand still focuses on the two or three line and lower tier cities, but this does not mean that Anta does not need to upgrade its brand.

In the past two years, Anta's brand market movement has gradually started to "tide brand". The Thompson series has been robbed by offering, and the most popular "KT4 joint name" has been frying from 999 yuan to more than 6000 yuan. And in the near future, Anta also launched a new brand AntapluS, locking the customers in the 25~35 year old white-collar women.

It is noteworthy that AntapluS and high-end yoga clothing Lululemon brand positioning is very similar, and in Anta's acquisition of Amer group's list, Lululemon founder Dennis J.Wilson is also a member, in muddy water short period, Dennis also subscribe to Anta sports 0.59% of the shares, is a manifestation of the true feelings.

From the current earnings report released by Anta, even though it has never been affected by the "short sale", the real test will come soon after the smooth completion of the short selling period. And because of the huge volume of the group, it will be even more difficult to maintain the high growth trend. Anta group also needs to constantly prove to the market that its own development and value can support the current market value and share price. In this process, the real integration of Amer can become the key.

For the whole industry, Zhang Qing believes that the environment is changing. "This year is only a sports year. Anta is a sponsor of the Chinese Olympic delegation. It will release greater value at the 2020 Olympic Games in Tokyo and the Winter Olympics in 2022."

But more industry insiders believe that the competition for sports brands will intensify in the next two or three years. Although Anta holds the trump card of FILA, the three parties have already carried the low ebb of 2008 from the earnings reports of Lining, XTEP and XTEP.

"Not only Anta is doing value retailing," Zhang Qing said. All the sports brands coming out are thinking about how to do the data processing of the retail terminal and how to better respond to the supply chain. And in the domestic fashion brands that have frequently been in fashion week, the market reaction of "Lining China" is the best, which at least proves that Anta's influence and brand value in a second tier city are still unable to catch up with Anta.

Ding Shizhong has always wanted to "not be China's Nike, but to be Anta of the world". After the acquisition of Amer, Anta's internationalization process is intensifying. The core team represented by Zheng Jie also needs to face the increasing management difficulty. From the company's system to the enterprise culture itself, Anta needs to compare with the international enterprises, and in the process, the short reports of the big organizations may still be on the road. Muddy water's short selling also reveals the collision brought by Anta's internal multi brand management and market positioning.

At least from the current market value, there is still a big gap between Anta and Nike. Whether this gap can be accelerated due to the acquisition of Amer remains to be seen. Author: Xie Yunzi