Anta Sports Products reinforced its status as the leading Chinese sports company last year, with a sales increase of 20.0 percent to 13,345.8 million yuan renminbi (€1,806.4m-$1,932.2m). The Anta brand's positioning as an affordable and increasingly functional Chinese brand has enabled it to more than quadruple in size in the last decade.
The group's gross profit margin jumped by 1.8 percentage points to 48.4 percent for the year and the operating profit margin reached 24.0 percent, down by 0.2 percentage points. This was chiefly blamed on added costs of the expansion of retail operations for Fila, for which the Anta group has rights in China, Hong Kong and Macau. Anta ended the year with net profit of RMB 2,385.5 billion (€322.9bn-$345.4bn), which was an increase of 16.9 percent.
Anta's expansion was driven by a sales rise of 18.3 percent for footwear, which makes up 45.0 percent of its turnover, while apparel managed a sales increase of 23.1 percent and raised its share of sales to 51.6 percent. Apparel yielded a gross profit margin of 51.0 percent, up by 3.2 percentage points, which was attributed to the stronger contribution from the Fila brand. It compares with a gross margin of 46.3 percent for footwear, up by 0.1 percentage point.
The Anta brand alone was sold in 8,860 stores at the end of the year, counting Anta and Anta Kids outlets, which compares with 8,489 at the end of 2015. The brand has been investing in products for football, capitalizing on the Chinese government's eagerness to improve football participation and performance in the country, with a plan to get 30 million pupils playing and the launch of 20,000 specialty football training schools. Running is another category where Anta launched more technical products, such as its intelligent running footwear and accompanying app.
The rise of the Anta brand's turnover has been supported by the Rio Olympics and Anta's partnership with the Chinese Olympic Committee, which saw it outfit Chinese athletes with the Champion Dragon Outfit. Anta boasted that Xi Jinping, the country's president, was wearing Anta in January when traveling to Zhangjiakou, where skiing competitions will be held during the Beijing Winter Olympics in 2022. This allowed the Chinese group to proclaim that the president had become its latest endorser.
The Anta brand has also capitalized on endorsement deals with several players in the NBA, such as Klay Thompson from the Golden State Warriors. Near the end of the year the Chinese brand sealed another agreement with the Filipino boxing champion Manny Pacquiao, to support its cross-training business.
At the same time, the group said that it saw continued expansion of the Fila brand, driven by partnerships with prominent Chinese people such as the fashion designer Jason Wu and the actress Guo Yuanyuan. There were 802 Fila and Fila Kids stores in the relevant markets at the end of last year, as compared with 640 a year earlier.
The Anta group is working the high-end functional sportswear market with the Descente brand, covering winter sports as well as training and other categories. The Chinese company sealed a joint venture with the owners of the Japanese brand in February last year, with a 60 percent stake held by Anta. Descente's first Chinese store was opened in August and five more were added by end of the year. The joint venture with Descente covers China, excluding Hong Kong and Macau.
The multi-brand strategy will be reinforced this year through a partnership with Kolon Sport, the South Korean brand. Anta said last month that it has sealed a joint venture agreement with Kolon Sport to sell the brand in Greater China, primarily to complement its offering in the outdoor apparel market.
Anta said that the two parties should ultimately have an equal interest in the joint venture, which covers China, Hong Kong, Macau and Taiwan. The board of directors will be composed of three members appointed by Anta and two by Kolon. The deal was formally sealed between Kolon Corporation, Kolon Industries and Anko Sports Products, a subsidiary of Anta Sports Products.
Kolon reportedly started exploring the Chinese market in 2016 and was sold in more than 200 Chinese stores at the end of last year. A director of Kolon Industries was quoted as saying in Business Korea that the agreement should raise the brand's recognition in China and the regional market, and that it was aiming to become the leading outdoor brand in Greater China.
The multi-brand strategy underpins the Anta group's retail strategy, which aims to cover a variety of retail channels as well as product categories. The stores for Anta and Fila often have different types of locations and target customers. The investments in online sales are across the board, which helped the group to more than double its sales on Singles Day.
The Chinese group intends to continue optimizing its retail network this year, with a growing percentage of shop-in-shops for the Anta brand. The company is targeting 9,000 to 9,100 stores for the Anta brand at the end of this year, along with 950 to 1,000 Fila and Fila Kids stores, and 50 to 60 Descente stores.
At the same time, Anta said it would continue to invest in innovation and the differentiation of its products. Another focus is on the supply chain, as the company is striving to shorten delivery times, to make its replenishment more flexible and make its cost structure more efficient.
Separately, the Chinese group reported that the order value for Anta-branded products at its trade fair for the third quarter this year was up at a low single-digit rate. Sales of Anta-branded products at retail value in the fourth quarter of 2016 were up at a high-teens rate, while they increased by 50 to 60 percent for other brands sold by the Anta group.
