Apparel / Textiles & Accessories

Adidas and Nike's two major sportswear giants Tmall flagship store sales in April fell by 78% and 59% respectively compared to the same period last year, while Uniqlo also plummeted 21%.

On May 6, Bloomberg quoted Morningstar’s report showing:

Adidas and Nike's two major sportswear giants Tmall flagship store sales in April fell by 78% and 59% respectively compared to the same period last year, while Uniqlo also plummeted 21%.

Following the fermentation of the Xinjiang cotton incident in March, the sales of Nike and Adidas in China have fallen sharply.

The sales of domestic brands Li Ning and Anta recorded significant growth. In particular, the sales of Li Ning's fashion product line "China Li Ning" Tmall soared by more than 800% year-on-year, and the overall sales of Anta's many brands also rose sharply. 59%.

As of Thursday's close, Li Ning's share price rose 6.49% to 69.7 Hong Kong dollars, with a market value of 173.7 billion Hong Kong dollars, a record high.

Adidas and Nike's Tmall sales in April fell sharply year-on-year, while Anta and Li Ning rose sharply

As China is an important market for many international brands, facing the impact of the boycott, adidas CEO Kasper Rorsted is optimistic that the group has previously resisted the sharp decline in demand in the sports market, but sales have subsequently recovered slowly and steadily. Therefore, Still very confident to have a good year in the Chinese market.

Adidas’s financial report shows that the company’s sales in Greater China for the first quarter of 2021 will increase by 1.56 times a year. Comprehensively assessing the geopolitical situation and the holding of large-scale sports events, the group’s Shangxiuji forecasts that sales for the entire year of 2021 are expected to increase by more than a year. 10%.

Nike data pointed out that in the fiscal year from June 2019 to May 2020, a total of nearly 20% of revenue came from the Greater China region. Data for the third quarter of fiscal year 2021 pointed out that China's revenue reached US$2.279 billion, an annual increase of 51%, showing that China's consumption power has been expanding its brand influence year by year.

On the other hand, the trend of Chinese domestic products is rising. Statistics show that the sales of Li Ning's fashion brand "China Li Ning" on Tmall platform doubled in April, an annual increase of more than 800%. The overall sales of Anta Sports' brands The amount increased by 59% annually, becoming a beneficiary of the boycott.

In this regard, Bloomberg said that due to China's effective anti-epidemic measures that enabled its economy to recover rapidly after the impact of the new crown epidemic, Chinese consumers have become a growth driver for global brand sales. However, due to changes in the external factors of the international environment, Chinese consumers' patriotic sentiment is high, which benefits Chinese local brands more.

Times have really changed! The sales of this Chinese brand soared 8 times

With the rise of the national tide, the domestic sports brand market has really changed.

China’s Li Ning’s sales soared 800% in April, but Adidas and Nike’s sales plummeted. This scene of great contrast is being staged in the domestic market.

News about Li Ning's hot sale, Nike and Adidas sales plummeting in China also quickly rushed to the hot search, which made many fans of the national trend "excited" and lamented the rise of the national trend.

China Li Ning's sales soared 8 times

International brands are "slapped"

Recently, data from the international rating agency Morningstar showed that the April sales of brands such as Adidas and Nike on Tmall’s flagship store declined severely, all of which were down compared to the same period last year. Among them, Adidas' sales in April fell 78% year-on-year, and Nike's April sales fell 59% year-on-year. Uniqlo's April sales fell more than 20% year-on-year.

When the sales of international brands encountered Waterloo, there was a hot scene for domestic products. Li Ning and Anta's overall sales in April increased by 72.3% and 51.2% year-on-year, respectively. Among them, the sales of Li Ning's brand China Li Ning in Tmall flagship stores in April increased by more than 800% year-on-year, and a variety of products were difficult to find.

Credit Suisse issued a report on China's sports goods industry and pointed out that in April, the sales of Tmall flagship stores accounted for 30% to 40% of the total online sales of sports brands in the Mainland. Before and after the May Day holiday, domestic brands experienced a collective increase in sales. According to Credit Suisse's statistics, from April 27 to May 3, compared with the same period in 2020, the sales of Li Ning's "China Lining" brand in Tmall flagship stores increased by 419%, followed by Anta's increase of 46.3% and Xtep's increase of 29.3%. The national tide ushered in spring.

Analysis believes that the Tmall platform is currently the only online sales channel for many brands, so it is one of the indicators that more intuitively reflects brand sales.

Domestic brands benefited after Xinjiang cotton incident

Economist Lang Xianping believes that there are three reasons for Li Ning’s hot sales and Nike’s sales plummeting: first, China’s high manufacturing level and guaranteed quality; second, fashion trendy brands are more likely to attract young people’s attention; third, ethnic and patriotic complexes and other factors Mixed up.

After the "Xinjiang Cotton" incident (March 24), Anta immediately withdrew from the BCI organization and expressed its position. Li Ning even directly released the label of Li Ning on the Internet, which has always clearly written Li Ning. The product uses cotton from Xinjiang.

In one week, the number of products containing "Xinjiang cotton" increased 3.4 times compared to the week before the 24th, and sales increased 13.5 times. At the same time, the categories of online product names with the "Xinjiang cotton" logo have increased significantly.

According to statistics from Zheshang Securities, after the outbreak of the "Xinjiang Cotton" incident, the sales of Li Ning's official flagship store 3.24-4.4 increased by more than 200% year-on-year. Anta Sports also increased by more than 100%. At the same time, Li Ning, Anta and other brands' "limited editions" The price of sneakers has risen sharply.

The Zheshang Securities Research Report pointed out that 10 years ago, overseas brands relied on their advantages in supply chain management, retail management, and brand power to expand their market share in the context of the awakening of brand awareness among Chinese consumers. The status of domestic apparel brand enterprises has improved significantly in the past five years. The rise of self-confidence in the consumer culture of the post-95s and even post-00s has allowed Chinese brands to continue to gain more attention from young people, and many areas are surpassing overseas giants.

It is worth noting that in the down apparel industry, Bosideng has also returned to the world's number one in the industry. Zheshang Securities stated that the Bosideng Group’s business revenue growth in the 2021 fiscal year will be more than 25%, and revenue is expected to exceed 12 billion yuan. Based on the current euro-renminbi exchange rate (7.7:1), after the end of the 2021 fiscal year, Bosideng Group's down jacket business income will once again surpass Moncler, and return to the industry's first place in the world.

Li Ning and Anta's share price soared

Driven by rising sales, the share prices of Li Ning and Anta have also gone up.

Li Ning's stock price reached a high of 72.95 Hong Kong dollars per share on May 7. As of the close of May 7, the stock price was reported at 68.5 Hong Kong dollars per share, with a total market value of over 170 billion Hong Kong dollars. During the period from March 9th to May 7th, Li Ning's stock price has risen by 67.07%.

On March 19, 2021, Li Ning Company announced its 2020 financial report. During the reporting period, the company achieved total revenue of RMB 14.457 billion, an increase of 4.2% over the same period in 2019. Gross profit increased 4.2% from RMB 6.805 billion in 2019 to RMB 7.09 billion. The overall gross profit margin was 49.1%, the same as the previous year.

For the whole year of 2020, Anta's share price rose by 77.62%. As of the close on May 7, the stock price was reported to be 144.2 Hong Kong dollars per share, with a total market value of over 373.6 billion Hong Kong dollars. Its share price since 2021 has risen by about 17%.

Anta Group’s 2020 revenue was 35.5 billion yuan, an increase of 4.7% year-on-year, of which Anta brand revenue decreased by 9.7% to 15.7 billion yuan, still ranking first among domestic sports brands, FILA increased 18.1% to 17.5 billion yuan; net profit 52 100 million yuan, although down 3.4%, but in the same year, it has surpassed Adidas's 429 million euros (3.3 billion yuan).

According to WIND data, within April 2021, a total of 24 institutions have given investment ratings to Anta, of which 19 have a "buy" rating, one has a "strong recommendation", and four have an "overweight" and "overweight" rating. Outperform the industry" or "outperform the market."

In terms of target price, Nomura Securities gave the highest target price, reaching 180.2 Hong Kong dollars, CITIC Securities gave 180 Hong Kong dollars, Morgan Stanley gave 173 Hong Kong dollars, and CICC gave a target price of 172.3 Hong Kong dollars.

"Bargain hunters" Reebok!

Li Ning and Anta become potential competitors

It is worth noting that there has been news recently that brands such as Anta and Li Ning intend to bid for the equity of Adidas' sports brand Reebok.

According to a report from the Shanghai Securities News, some sources expect that Reebok’s sale price will be about 1 billion euros, or about 7.78 billion yuan. Compared with the 2006 purchase price of US$3.8 billion (approximately RMB 30 billion at the exchange rate at the time), it is equivalent to a 25% discount, which can be described as a "fracture price."

At present, the potential bidders for the Reebok brand include Li Ning, Anta, VF Group, which owns brands such as Timberland, Vans, The North Face, Wolverine, an established American shoe brand, and private equity such as TPG Capital, Sycamore, Cerberus, and Apollo. investor.

Adidas stated in the aforementioned statement to initiate the divestiture process that it will ensure that Reebok finds a takeover party that will enable the company to achieve greater development.

An unnamed sports industry investor told reporters that Anta, which has completed the acquisition of international brands such as FILA and KOLON SPORT, and has achieved good operating results after the acquisition, has become a leader in the competition for Reebok. According to Anta's 2020 financial report, Fila contributed 49.1% of Anta's overall revenue during the reporting period, and its annual revenue increased by 18.1% year-on-year.

This person believes that Li Ning, who has few successful cases in the field of international mergers and acquisitions, is not in an advantageous position in the competition with other opponents. The VF Group just spent US$2.1 billion to complete the acquisition of the casual apparel brand Supreme. I am afraid it will be difficult to make a major acquisition again in the short term.