Anta Sports Products kept the momentum going in the first half of 2019, with a sales increase of 40.3 percent to 14,810 million yuan renminbi (€1.9bn-$2.1bn), driven by a very strong performance from Fila, which Anta licenses in China.
This led to a 27.7 percent jump in comprehensive net income attributable to shareholders to RMB 2,482 million (€312.4m-$346.4m), although it included a small quarterly loss at Amer Sports, whose revenues are not included in Anta's turnover. The company's gross margin firmed up by 1.8 percentage points to 56.1 percent, while the operating margin climbed by 3.2 percentage points to 28.7 percent.
Anta, which is the largest sporting goods company in China, is the leading investor in a Finnish-based consortium, Mascot JVCo, which closed on the acquisition of Amer Sports during the period, for all the shares of the Finnish-based group. Excluding Anta's share in the joint venture, Anta's net profit jumped by 53.5 percent to RMB 3.07 billion (€390m-$430m), faster than at any time in the past six years.
Accordingly, Amer's results for the second quarter ended on June 30 were included in Anta's interim financial report. Amer reported separately a small loss of €51.2 million in the quarter, up from a €28.9 million loss in the comparable 2018 period, on a 14.0 percent increase in revenues to €518.9 million. Amer said that it will provide additional details of its operations when it reports half-year results on Sept. 30.
Anta's management said the investment consortium will continue to cooperate closely with the Amer Sports team to complete the integration, formulating potential expansion plans. The company is building on its multi-brand and omni-channel strategy, focusing on being “customer-centric.” It said this model has enabled Anta's brands to spread across the entire market spectrum from the mass end to the high end, with products for professional sports, popular sports, high-end athleisure and urban strolls, as well as outdoor and children's wear.
In the first half of 2019, the group kicked off what it calls the “Year of Synergy and Value,” in which it is implementing measures to improve efficiency. It divided its brands into three categories for centralized management: Professional Sports, Fashion Sports, and Outdoor Sports. Each brand group cooperates closely with each functional department, and with dedicated teams for design, branding, and sales and distribution.
The group's revenues from the Fila brand rocketed by 79.9 percent to RMB 6,537 million (€822.7m-$912.3m) in the first half, generating 80.9 percent higher operating income of RMB 1.89 billion (€240m-$260m). Anta's management said it now considers Fila a pillar of China's sportswear market.
The Anta brand posted a growth of 18.3 percent to RMB 7,589 million (€954.9m-$1.1bn) during the same period, and its operating profit increased by 42.1 percent to RMB 2.44 billion (€310m-$340m). The group's other brands, including Descente, Sprandi, Kingkow and Kolon, raised their sales by 36 percent to RMB 683.1 million (€85.9m-$95.3m).
Apparel outperformed footwear across the group. While sales of footwear went up by 25 percent to RMB 5,123 million (€644.6m-$715.0m), sales of clothing jumped by 51 percent to RMB 9,150 million (€1.1bn-$1.3bn) and accessories gained 41 percent to RMB 536.3 million (€67.5m-$74.9m).
The company continued to develop its e-commerce segment with its own managed sites as well as collaborations with Tmall, JD, Vipshop and other platforms.
The Anta brand alone had 10,223 stores at the end of June, up from 9,467 at the end of 2018, including dedicated Anta Kids stores. In China, Hong Kong, Macao and Singapore, the number of Fila stores increased from 1,652 in December to 1,788 in June. The numbers include stand-alone stores for Fila Kids and Fila Fusion. The total network operated by the group at year-end also included 117 Descente stores, 173 Kolon stores, 77 Kingkow stores and 104 Sprandi stores.
By the end of 2019, the group expects the total number of Anta stores in China to go up to 10,300-10,400, and the total number of Fila stores in China, Hong Kong, Macao and Singapore to reach 1,900-2,000.
During the period, Anta partnered with Coca-Cola to launch a number of collaborative footwear, apparel and travel products, in order to commemorate the 133rd birthday of the famous fizzy drink. In April, it also launched its brand-new “Hydrogen Running Shoes,” which weigh a mere 110 grams. It is the first product line of running shoes by Anta that focuses on light weight as a selling point.
The group is preparing to take advantage of the rising interest in winter sports through the Winter Olympics to be held in and around Beijing in 2022. This applies to the Anta brand, which will again be an apparel partner for the Chinese Olympic Committee, as well as the Descente brand, with which Anta formed a joint venture in 2016 for distribution in China. Amer brands like Salomon and Arc'teryx will also be involved in the effort.
Regarding its objectives for the remainder of the year, Anta said it is looking increasingly at the international market for expansion, as competition in China's sportswear industry has become fierce. It is hoping to support the growth of the group to turn it into a global brand to compete on the international stage.
Anta has just entered the South African market. The project is run by Justin van Pletzen, who is also representing Xtep International's newly acquired K-Swiss and Supra brands in the country. He was previously working as a key account manager for the Gulf Marketing Group, based in Dubai.
In order to take Chinese brands to a global level, the management believes that product quality, value and branding are “far more” important than low prices. It said moving from competing in price to competing in value and innovation is the way for Chinese brands to go global.