By QIN Siyue
The four major Chinese sports brands, Anta, Li-Ning, Xtep, 361°, collectively achieved revenue of 544 billion yuan (US$76 billion) in the first half of the year. However, signals from the capital market are not positive.
This year, the sports sector of the Hong Kong stock market has been constantly on the slide, and some stock prices have fallen by over 20 percent. Throughout the year, Chinese sports brands have been occupied with defending their stock prices.
The most noticeable decline is Li-Ning, whose market value has sunk by over half in the past year. On Monday, Li-Ning stock fell over 16 percent, a new low since March 2020. That makes a decline of over 70 percent for the year, making it the worst-performing stock in the Hang Seng Index.
On the other hand, Li-Ning’s revenue grew by 13 percent increase and its financial situation appears relatively robust. However, over-reliance on the main brand and lack of new ideas are concerned. High inventory - around 2 billion yuan - has also undermined market confidence.
Anta Group, on the other hand, is considered a successful case of integrating multiple brands in the sports industry. But Anta has had no more comfort than Li-Ning this year, with its t value falling 6 percent and stock price collapsing from time to time.
Xtep is currently in freefall. On the release of Xtep’s Singles Day numbers, the stock price fell by 16.5 percent.
Analysts are not been optimistic. Whether it’s Anta or Xtep, a lot of leverage was added during acquisitions and despite vigorous promotion, the two groups’ financial reports make sorry reading.
“Cooling down” is an overall trend in the sports sector, and each Chinese brand faces its own challenges.
Li-Ning needs new growth points, Anta heavily relies on mergers and acquisitions, Xtep needs to overhaul the brand. Other brands face challenges such as loss of freshness and inventory turnover.
In terms of strategic adjustments, each company needs to analyze its specific problems .
In terms of growth dynamics, the focus used to be on distribution but has switched to meeting diverse customer needs.
Public data indicates that the Chinese sports shoe and clothing market is expected to maintain double-digit growth in the coming years, with the market reaching around 700 billion yuan by 2030.
