Anta Sports Products has released generally good results for the full year, despite the impact of the pandemic. Fueled by the continued progress of Fila’s joint venture for the Chinese market, the group’s total revenues rose by 4.7 percent to 35,512 million yuan renminbi (€4.59bn-$5.43bn), bouncing back from a difficult first half, as its operations went back to normalcy in China once the local lockdowns ended. The group benefited from strong online sales, which soared by 53 percent from 2019, accounting for 26 percent of turnover, compared with 18 percent in 2019.
Net income inched down by 3.4 percent from the previous year to RMB 5,162 million (€668.5m-$789.4m) once the losses of Amer Sports were taken into account. Amer’s results are now included in the bottom line, since the European group became indirectly controlled by Anta last year as part of a consortium with other investors.
Amer Sports posted a net loss of RMB 1,140 million (€147.6m-$165.0m), on revenues of RMB 19,450 million (€2.51bn-$2.81bn), compared with RMB 17,499 million in the last nine months of 2019 after the acquisition was completed. Anta owns 52.7 percent of Amer’s parent, AS Holding.
The Anta group’s gross margin expanded by 3.2 percentage points to 58.2 percent, boosted by higher DTC revenues from the Anta brand and by the increased contribution from the more premium Fila brand, whose gross margins are higher. The group’s operating margin improved by 0.2 percentage points to 25.8 percent, with proportionately higher personnel and R&D costs offset by lower advertising and promotion expenses.
Fila, for which Anta has the rights for Greater China and Singapore, was again a shining star, surpassing the Anta brand for the first time as it recorded an 18.1 percent increase in revenues to RMB 17,450 million (€2.25bn-$2.67bn). The company attributed this performance to the growth of e-commerce and several collaborations in 2020, including a FILA x Wilson series and another with the Japanese designer Mihara Yasuhiro. The brand’s gross margin declined by 1.1 percentage points to 69.3 percent, because of an increase in retail discounting and a write-down of inventory due to the impact of the pandemic. The operating margin dipped by 1.4 percentage points to 25.8 percent.
The Anta brand’s revenues declined by 9.7 percent to RMB 15,749 million (€2.0bn-$2.4bn), weighed down by the cancellation of wholesale orders amid the Covid-19 outbreak. Anta is already preparing for the Beijing 2022 Olympics with dedicated sportswear collections. It launched a dedicated Anta Running line last year. It also launched the sixth generation of Klay Thompson’s KT hero basketball shoe. The brand’s gross margin decreased by 3.4 percentage points to 44.7 percent, while the operating margin went up by 1.4 percentage points to 28.2 percent.
Meanwhile, the Other brands distributed by the group in China, including Descente, Sprandi, Kolon Sport and Kingkow, grew by 35.4 percent to RMB 2,313 million (€299.5m-$353.7m). Descente opened its first concept store in Beijing, while Kolon Sport partnered with Salomon on a joint Speedcross hiking shoe.
By categories, the group’s footwear revenues increased by 11.3 percent to RMB 12,700 million (€1.64bn-$1.94bn), apparel was up by 1.3 percent to RMB 21,671 million (€2.80bn-$3.31bn), and accessories rose by 1.9 percent to RMB 1,141 million (€147.7m-$174.5m).
The total number of stores in the group rose from 12,943 at the end of December 2019 to 12,995 at the end of the year. Of those, 9,922 were Anta, and 2,006 were Fila.
As previously reported, Anta has decided to do away with the wholesale distribution model that it has employed for 20 years in 11 major provinces. Instead, it is currently switching to a new business model that will have only Anta-owned stores and a handful of key franchise stores. It will spend RMB 2.0 billion (€261.7m-$310.2m) to realize this transition, with 80 to 90 percent of that sum spent to buy back stock from the wholesale channel. Around 3,500 stores, or 35 percent of the total, will be affected by the change. Anta will directly own about 60 percent of these, while franchisees will operate 40 percent of them. It expects to achieve these goals by the end of 2021.
With these moves, which are expected to be completed by the end of 2021, the management is being inspired by its success with the Fila brand, which adopted a direct retail model for a majority of its stores in Greater China. It believes that adopting this model for the Anta brand’s business will allow direct retail stores to order, replenish and redirect inventories directly from the distribution center with greater synergies.