After sharp upticks in sales and profits fueled by its multi-brand and omni-channel strategy in China last year, Anta Sports Products says it wants to become a larger international company, with a more complete portfolio of international brands.
The Anta group reinforced its standing as a leading Chinese sports company last year, with a sales jump of 25.1 percent to 16.69 billion yuan renminbi (€2,124m-$2,635m). The group's gross profit margin increased by 1.0 percentage point to 49.4 percent for the year, while its operating profit margin dipped by 0.1 percentage point to 23.9 percent. It ended up with profit attributable to equity shareholders of RMB 3.09 billion (€393.3m-$488.0m), which was an increase of 29.4 percent and amounted to a net profit margin of 18.5 percent.
The company continued to pursue its multi-brand strategy, including the Anta brand for the general sports market as well as Fila for sports fashion, after it acquired Fila rights for China, Hong Kong and Macao in 2009. It sealed a joint venture with Descente in 2016 to move into the more technical performance sports market, particularly in winter sports and fitness. Another joint venture with Kolon Sport from South Korea was added last September for the outdoor market. Around the same time the Anta group bought Kingkow, a brand of children's apparel.
In the ten years since its launch on the Hong Kong stock exchange in 2007, the Anta group has more than quintupled its sales. The company has diversified its business to support growing sports participation in China, and surpassed Li Ning as the leading Chinese sports company. Anta described 2017 as a year of strategic transformation, as it switched from a traditional private company to adopt contemporary governance standards and to compete at international level.
Ding Shizhong, the group's chairman and chief executive, said in a statement that Anta was aspiring to become a competitive global multi-brand company and that it was launching its globalization strategy in 2018. The group's annual report for last year does not provide any details on the geographic spread of its sales.
Anta previously publicized a target for all its brands to reach retail sales of RMB 100 billion (€12.7bn-$15.8bn) in 2025 with a compound annual growth rate of 20 to 25 percent. Other targets were set for 2020, to reach footwear sales of 100 million pairs and apparel sales of 130 million pieces. Anta wants to build a retail network of more than 11,000 stores in 2020, while online sales should account for about 20 percent of its retail turnover.
While starting to tap into international markets with some of its brands, Anta continues to search for other high-end international brands to fill the gaps between various market segments. At the same time, it will continue to improve its product differentiation and increase its market share in the running, boxing, basketball, women's fitness, cross training and skiing sports segments.
Anta's Chinese brand identity has been reinforced over the years through its partnership with the Chinese Olympic Committee and the Chinese Sports Delegation, which was renewed last year for two Olympic cycles. It became the official sportswear partner for the 2022 Beijing Winter Olympics and the Paralympics.
The year was further marked by the launch of running footwear with A-Livefoam technology, while Anta continued to build its business in the football and basketball footwear markets. It helped that Klay Thompson, Anta's leading endorsee in basketball, made it to the NBA Finals with the Golden State Warriors. The Freshness campaign was launched in June, targeting the women's training market. There were 9,467 Anta stores at the end of 2017, including Anta standalone children's stores, up from 8,860 at the end of 2016.
The Anta brand ended the year with a strong quarter. The group reports that retail sales of Anta-branded products moved up by 20 percent to 25 percent in the three months, while retail sales of other branded products shot up by 85 percent to 90 percent, excluding brands that joined the group since October 2016.
The number of Fila and standalone Fila Kids stores reached 1,086 at the end of the year, compared with 802 the previous year, in mainland China as well as Hong Kong, Macao and Singapore.
The Descente brand continued to focus on skiing, training and running, but it expanded into what the group described as the all-terrain category last year. The company reported 64 Descente stores at the end of 2017, up from just six at the end of 2016.
The Anta group also used the Sprandi brand to target the leisure market, with an endorsement from the Chinese actress Olivia Wang.
As part of its guidance, Anta said that it should have 9,700 to 9,800 stores for the Anta brand at the end of 2018, as well as 1,300 to 1,400 Fila stores across its territory for this brand. Descente will continue to focus on prime locations, to end the year with a network of 100 to 110 stores in China. The Kingkow brand is anticipated to have 60 to 70 stores, while Sprandi should expand to 190 to 200 stores, and Kolon Sport should have 200 to 210 outlets in China by the end of 2018.
Anta has continued to develop its online business through its own online store as well as partnerships with platforms such as Tmall, JD and Vipshop. The company adds that it allowed some of its outstanding offline distributors to sell Anta products online. E-commerce functions such as interface, product descriptions, product search and catalog functions were enhanced as well.
Across the board, Anta said it adopted an increasingly consumer-centric and retail-oriented strategy, making its stores more efficient and responsive. The group's supply chain has been improved to shorten production lead times as well. This includes the implementation of ultra-rapid footwear production lines boasting a daily capacity of 3,000 pairs with just 30 workers, which increased productivity while saving on labor costs.
