Anta Sports Products is continuing to reap the benefits of its multi-brand and multi-channel strategy, with a sales rise of 19.2 percent to 7,323.2 million yuan renminbi (€930.1m-$1,099.4m) for the first half of this year, fueled by increased demand for running and football products.
Due to the expansion of its retail business and stringent cost control, the group has raised its gross profit margin by 2.7 percentage points to 50.6 percent. The same retail expansion pushed up selling and distribution costs, leading to a weaker rise in Anta's operating profit margin, up by 1.7 percentage points to 25.9 percent for the six months. It ended the period with net profit attributable to shareholders worth RMB 1,451.4 million (€184.4m-$217.9m), up by 28.5 percent.
The performance was apparently strongest in the second quarter, as Anta separately reported in an operational update that the retail sales of Anta-branded products increased by 20 to 30 percent for the three months, while the retail sales of other brands in the group soared by 50 to 60 percent.
The company attributed the improvement to its investments in product and brand recognition, as well as adjustments in its retail strategy. The Anta group is sharing data with suppliers and retailers, providing precise ordering guidance to retailers to avoid inventory pile-ups, and requiring all retail partners to strictly apply retail policies. Anta is also helping retailers to improve their performance through a flattened sales management system and a more efficient distribution structure, as well as investments in visual merchandising around its key running and basketball products.
The Anta brand has reinforced its position as the leading Chinese sports brand, with 9,041 Anta and Anta Kids standalone stores by the end of June, up from 8,860 at the end of last year. They are mostly street outlets, but the company is shifting toward more openings in shopping malls and department stores, as well as online retailing.
The turnover rise was driven by apparel, which generated a sales increase of 21.7 percent to RMB 3,684.8 million (€468.0m-$553.2m), compared with growth of 18.1 percent for footwear to RMB 3,387.2 million (€430.1m-$508.4m).
Some of the focus has been on basketball, a category in which Anta aims to become the market leader in sales and brand value. Its partnership with Klay Thompson was most productive, as the Golden State Warriors player wore his Anta signature shoes during the NBA Finals. The brand launched a campaign across eight cities in China during Thompson's latest visit to the country. Anta has sold 1.42 million pairs of KT shoes from their launch in 2015 up until the ordering trade fair for the last quarter of this year.
Anta expanded in the running market as well, supported by its Run For a Life campaign and its latest running footwear with A-Livefoam technology. The company also launched Antauni, a program that enables consumers to fully customize their Anta running shoes. Zhang Li, a female actress, was contracted to headline a campaign for cross-training products.
Football is strongly in focus for Anta Kids, which is selling football footwear starting from RMB 79 (€10-$12) to support the Chinese government's investments in the development of youth football. Zheng Zhi, the captain of China's national football team and an Anta endorsee, has been involved in several marketing activations for the football range.
For the Fila brand, the emphasis at Anta has been on the lifestyle market and on fitness. The group is working together with several international designers for its sports fashion ranges, while the more functional fitness products included a footwear range intended for high-intensity interval training. Fila also expanded its retail network to Singapore and opened its first store at the Ion Orchard shopping mall. The Anta group ended the six months with 869 Fila stores and Fila Kids standalone stores in China, Hong Kong, Macau and Singapore, up from 802 stores at the end of last year.
Anta bought the rights for the Fila brand in China, Hong Kong and Macau from Belle International in 2009.
The joint venture formed last year with Descente, the Japanese winter sports apparel specialist, has led to the opening of 21 stores, in cities such as Beijing, Shanghai, Dalian and Shenyang, compared with six at the end of last year. The company wants to take advantage of the Chinese government's plans to raise winter sports participation to about 300 million people, in the framework of the 2022 Beijing Winter Olympics, but the Descente brand is also used for functional running and training products.
The Anta group is making more structural investments to improve its operations. They include a performance-based incentive system to motivate suppliers and encourage them to make more differentiated products. Partly for the same purpose, Anta has established a design center in the U.S. to complement its entities in China and Japan.
The company is also preparing for the launch of a new logistics center in early 2018, to drastically reduce delivery times from an average of more than one month to as little as two days. This should strongly support the group's strategy to establish a business model that integrates wholesale, stationary and online retail sales.
The group is targeting 9,200 to 9,300 Anta and Anta Kids stores by the end of the year, along with 950 to 1,000 Fila and Fila Kids stores, and 50 to 60 Descente stores. Among the retail development plans, it intends to diversify Fila stores and to open multiple stores in one location, including Fila Athletics and Fila Fusion specialty stores.
