Exceeding expectations, Anta Sports Products reported a 40.3 percent increase in revenues to 14.81 billion renmimbi (€1.889bn-$2.072bn) for the first half ended on June 30. The attributable profit went up by 27.7 percent to RMB 2.48 billion (€316m-$347m), and it jumped by 53.5 percent to RMB 3.07 billion (€391m-$429m) excluding its 58 percent share in the Mascot Bidco consortium, which has taken over Amer Sports.
Amer contributed a loss of RMB 849 million (€108m-$119m) on revenues of RMB 3,964 million (€505.4m-$554.5m) for the period running from March 26 to June 30, in which it started to be partially owned by the leading Chinese sporting goods company. Anta said the loss was expected, adding that it doesn't affect the value of its investment in the company, which evidently contributed to a reduction in its net cash position to RMB 450.1 million (€57.38m-$62.96m) from more than RMB 9 billion one year ago.
Independently of Amer, the Anta group's gross margin rose by 1.8 percentage points to 56.1 percent, due to a higher proportion of retail sales and the early receipt of government grants. The operating margin increased by 3.2 percentage points to 28.7 percent.
The growth in the group's sales and profits was powered by the ongoing progress of the Fila brand, for which the company has the rights for China, Hong Kong, Macau and Singapore. Its revenues soared by 79.9 percent to RMB 6.54 billion (€834m-$915m), and its operating profit margin grew by 0.2 percentage points to 29.0 percent.
The Anta brand's revenues rose by 18.3 percent to RMB 6.42 billion (€818m-$898m) and its operating margin went up by 5.4 percentage points to 32.2 percent. The other brands in the group's portfolio, including Descente, Kolon Sport and Sprandi, had a negative profit margin of 11.6 percent.
The management told investors that it has kicked off a “year of synergy and value,” riding on “synergistic incubation” to improve its own effectiveness and to accompany the group's internationalization. Implementing a category management approach, it has appointed dedicated teams for three brand groups, one for its Sports brands, the other for its Fashion Sports brands and the third one for its Outdoor brands. The teams will be responsible for production, sourcing and retail, including e-commerce.
The Outdoor Sports Brands Group comprises all the brands of Amer Sports, including Arc'teryx, Atomic, Salomon and other less outdoor-oriented brands like Precor. The rather technical Descente and Kolon Sport brands are also part of this group. Peak Performance, a recent acquisition of Amer for which Anta had been bidding, has been bundled with Fila and Sprandi in the Fashion Sports Brand Group.
Overall, the group's revenues from its retail operations grew by more than 60 percent in the first half of 2019. The total number of stores in the group reached 12,479 at the end of June. Of those, 10,223 were Anta and Anta Kids stores, and 1,788 were Fila, Fila Kids and Fila Fusion stores.
In terms of retail development through mono-brand stores and shop-in-shops, the group is focusing Fila, Descente and Kolon Sport on first- and second-tier cities, while Sprandi covers second-, third-tier and lower-tier cities. The Anta brand is gaining a presence in all the urban tiers in China. It has just inaugurated a ninth-generation format of 2,000 square meters in Chongqing and Shanghai with a better appearance and a stronger focus on the customer experience. It has also launched a 4.0 concept for Anta Kids around a “wild park” theme, with interactive features.
Anta introduced many new products in the first half of the year, including a very light shoe. Its R&D expenses represented 2.4 percent of sales. In-house production of footwear and apparel stood at 34.1 percent and 11.9 percent of sales, respectively.
The management said it wants to leverage digitalization and bid data to deliver “customer-centric” products and “value retailing” experiences.
In view of the Winter Olympic Games, which will start taking place in Beijing 1,000 days from now, Anta has collaborated with the city's Palace Museum in an initiative focusing on rebranding China's traditional culture with a more modern approach, and launched a special Palace Museum edition of “Anta x Winter Olympic Games” products.
Anta's management said it is placing more emphasis on the quality of its growth rather than its speed, competing in value and innovation rather than price. Its chairman, Ding Shishong, said that the creation of better products in China will also help Anta Sports to compete on a global scale, entering other markets.
