While providing another update on its results for the second quarter, Anta Sports Products announced new strategic targets that it wants to achieve over the next five years and a 24-month acceleration plan, called “Lead to Win,” for its core Anta brand. It had nothing to say at this stage about the Amer Sports Group, in which it has a controlling stake.
The company wants to achieve a 18-25 percent compound annual growth rate (CAGR) for its retail sales under all its brands - including Anta and its rights in China for Fila, Descente and Kolon Sport - over the next five years, resulting in market share gains of three to five percentage points in China during the period. The CAGR increase for the brand’s online business is set to exceed 30 percent over the same period, with online sales expected to account for 40 percent of total retail sales in 2025. Anta’s five-year strategic targets also include the opening of more stores in first-, second- and third-tier cities, with retail sales generated from the offline channel expected to account for more than 50 percent of the total turnover. In addition, the company plans to double the number of mono-brand stores in shopping centers. The overall objective is to maintain Anta’s leading position among Chinese sports groups.
The company wants to emphasize the roots of the Anta brand in performance sports such as running and basketball. It is aiming to double the number of running and basketball shoes by 2025 to 40 million and 12 million pairs, respectively. It is budgeting investments of over 4 billion yuan renmimbi (€420m-$616m) to improve its R&D systems globally over the next five years; strengthening its five design centers in China, the U.S., Japan, South Korea and Italy, and striking partnerships with strategic suppliers, universities and research institutes. It also plans to step up its focus on women’s products and the Anta Kids line.
Meanwhile, a more immediate 24-month “Lead to Win” acceleration plan revolves around these and other aspects: 1) Continuing to sponsor Chinese national teams and athetes, while opening Anta Champion stores in first- and second-tier cities that will promote them; 2) Continuing to expand the roster of sponsored athletes to help seize the opportunities represented by the “Two Olympics” - Tokyo 2020 and the 2022 Beijing Winter Olympics; 5) “Winning and leading” Generation Z by working closely with idols/athletes who are particularly popular among young people and by leveraging social media for that purpose, while recruiting youth-oriented designers and optimizing online sales, 3) Accelerating DTC transition and digitalization by consolidating multi-level channels and leveraging digital tools through an investment of more than RMB 400 million (€42m-$62m) in digitalization in the next 24 months, with a goal of reaching 40 percent store efficiency and driving 70 percent of total retail sales through DTC marketing; 4) Maintaining the leading market position of Anta Kids in its market segment by focusing on running, outdoor activities, football and basketball; and finally 5) Promoting sustainability and sports welfare, including a RMB 600 million (€78m-$92m) investment in sports welfare in the next three years to support rural revitalization, as well as a collaboration with the World Wildlife Fund to help the green transformation of over 3,000 scaled textile suppliers in the industry and to promote the conservation of biodiversity.
Slightly lower growth in Q2
In a new operational update relating to the performance of Anta, Fila, Descente, Kolon Sport and other brands but not including the businesses of the Amer Sports joint venture, Anta Sports said that retail sales of Anta branded products recorded 35 to 40 positive growth in the second quarter ended June 30 as compared to the same period a year earlier. Retail sales of Fila branded products increased by 30 to 35 percent while those for all other branded products surged by 70 to 75 percent.
The growth was somewhat lower than in the first quarter, which benefitted from a strong comparison effect with the first quarter of 2020, when strict lockdown measures were imposed in Chinese authorities because of the coronavirus outbreak.
On the other hand, like other Chinese sports brands, the group benefitted in the quarter from government-back pressure on western brands that spoke out against sourcing from the Xinjiang region. The controversy certainly helped their share prices, with Anta now trading at 44 times forward earnings and Li Ning at about 55 times, compared with around 35 times earnings for Adidas and Nike.
For the first half, the Anta group said that retail sales of Anta branded products saw 35 to 40 percent growth versus the same period of 2020, while retail sales of Fila branded products posted an increase of 50 to 55 percent and retail sales for all other branded products jumped by 90 to 95 percent.