While continuing to raise its sportswear sales in China and in international markets, Peak Sport Products intends to expand laterally by operating as a sports agency and an organizer of sports events, fitness camps and training programs. The Chinese sports company says it wants to invest in technology and staff to transform itself from a sportswear producer into a comprehensive sports solution provider.
The Chinese company's decision to invest more in the organization of sports events may well have been inspired by reforms announced by the Chinese government two years ago, which point to a liberalization of such events in order to stimulate sports participation. These reforms have spurred large-scale investments by Chinese and other companies into the wider sports business.
Peak Sport's sales increased by 9.4 percent to 3,107.5 million yuan renminbi (€423.7m-$480.3m) last year. Footwear sales jumped by 16.1 percent to RMB 1,335.3 million (€182.1m-$206.4m), chiefly due to the launch of running footwear, while apparel sales moved up by 4.3 percent to RMB 1,703.0 million (€232.2m-$263.2m). The group's gross profit margin advanced by 0.7 percentage points to 38.7 percent and profit attributable to shareholders increased by 22.3 percent to 392.3 million (€53.5m-$60.6m).
Peak Sport's turnover jumped by 11.2 percent to RMB 2,434.8 million in China, where Peak has been focusing on second and third-tier cities. The fastest growth was recorded in the northern region of the country.
The number of Peak stores declined by five to 5,999 in the course of last year, but the number of distributors increased from 88 to 100 as Peak sought to cover new markets. The group also encouraged distributors to invest in directly operated retail outlets, in order to respond to market changes more rapidly. The number of retail outlets directly run by distributors amounted to 36.1 percent of all stores by the end of the year.
Peak Sport has adopted several measures to proactively manage inventory, which made the stores more efficient and improved its own operations. While achieving continued growth in wholesale orders, the company stabilized its retail discount rate and channel inventories last year.
About 21.6 percent of the group's turnover came from international markets last year, but while the foreign ratio was higher than those of other leading Chinese brands, it was lower than in the previous year, when foreign revenues amounted to 23.0 percent of its turnover. Sales were nearly halved in Europe, down by 48.7 percent to RMB 150.2 million (€20.5m-$23.2m), but they more than doubled in Africa to RMB 100.1 million (€13.7m-$15.5m) and soared by 72.6 percent in North America to RMB 96.3 million (€13.1m-$14.9m). Sales in other Asian countries amounted to RMB 264.9 million (€36.1m-$40.9m), up by 21.0 percent.
Peak's international business has been supported by endorsement deals with basketball players such as Tony Parker and Dwight Howard. The brand is worn by eleven NBA players and three NBA teams, including the Houston Rockets, the Miami Heat and the San Antonio Spurs. Peak is the partner of eight national basketball associations, including Germany, Australia and Serbia. This year the company wants to take advantage of its basketball endorsements by improving the operation of its official group purchase website.
Peak has garnered exposure in women's sports through sponsorship agreements with eight players in the Women's Tennis Association and events such as the Wuhan Open and the WTA Finals in Singapore.
Last year the company added another focus with track and field and marathon events, capitalizing on soaring participation rates in running and the launch of a footwear range for runners of all levels. Peak sponsored 34 professional running events last year, including the European Athletics Indoor Championships, the Dalian and Ningbo marathons, and the International Vertical Marathon Series.
