Li Ning's first-half performance declines, and local sports brands will collectively “winter”

The Li-Ning Group's mid-week report released on the evening of the 22nd showed that the net profit attributable to shareholders of listed companies for the first half of the year dropped by 84.9% year-on-year, and issued the first annual loss warning after Hong Kong’s listing. Affected by this, on the 23rd Li Ning Group's share price plunged 3.8%. According to the data, the stock of the Li Ning Group was RMB 1.138 billion in the first half of the year. The Li-Ning Group stated that in the second half of the year, it will increase its sales promotion efforts to further build clearance channels. At the same time, it further adjusted the layout of retail-end stores and improved retail management capabilities.

Local sports brands collectively “winter”

Regarding the shrinking profits of Li Ning Group, Li En, deputy head of the Guangdong Clothing and Apparel Industry Association, believes that due to blind expansion, the supply chain mechanism is not perfect, Li Ning and other domestic sports brands are undergoing transformational pain. “This big drop in profits can be seen as an early release of risk, signifying that the Li Ning Group has survived again.” Li En said.

In fact, Li Ning Group is not only plagued by the performance decline, but the local sports brands are collectively experiencing a “cold stream”. Data show that in the first half of the year, except for “Xtep International” revenue rose slightly; Anta dropped 11.6% year-on-year; 361 degrees decreased by 10% year-on-year; Peak decreased 28.5% year-on-year; China's movements fell 29.4% year-on-year.

Cheng Yuan, a senior researcher at Huatai United Securities, believes that the decline in the performance of local companies “is not a cold day.” In addition to the market space being squeezed, after the local sports brand went public, the local sports brand miscalculated the market consumption ability, blindly accelerated the opening of the store layout, and strived for market share, which led to high inventory levels, and eventually dragged down the performance.

Cheng Yuan believes that "staking a ride" is essentially an extensive mode of operation that leads to the emergence of a bustling bubble in sports brands. With the impact of apparel subdivision on the sports market and the need for reforms in business models, the speed of bubble bursting also increases. Accelerated.

One of the direct consequences of “staking” is the high inventory. Investment Group analyst Wang Ge believes that inventory issues affect the capital turnover and business continuity, and through discount promotions to digest the inventory will affect the company's brand image, poor sales in the quarter will affect the time of the new season and the type of the next season .

Wang Ge also believes that due to the lack of R&D and innovation capabilities of domestic companies starting with the process of substituting processing, products are mimicking each other and homogeneity is serious, so the ability to resist cyclical demand decline is weak.

"Cultivating internal strength" may usher in "spring"

According to industry insiders, as the current production capacity of domestic sports brands and the laying of stores in China have basically become saturated, it will be difficult to usher in a “spring” of recovery in the next 2-3 years.

Cheng Yuan believes that local sports brands should decisively shut down inefficient stores, reduce operating costs, improve single store operating performance, and end the blind expansion of the bubble era.

Industry experts pointed out that Adidas and Nike's advanced experience may be worth learning from. First, excellent product quality and leading style make them popular in the market. The replacement rate of new products of these two brands is high, and each new season product enters the storefront to make people feel refreshed. In addition, products are subdivided into place, and swimwear, children's wear, yoga and many other types of products cater to the needs of more consumers.

"Domestic sports brands should not fight with their opponents, but must fight the market." Li En pointed out that the company's success will be won by the brand and operating model, the domestic sports brand's top priority is to find out their own personality and core competitiveness, accurate Positioning, digging out its own unique brand connotation.

Experts believe that the current local sports brand is in a stage of differentiated competition, and the era of winning by quantity is no longer a return. "Cultivating internal strength" is a "required course" that companies can't relax at any time. In the subdivided areas, improving product quality, updating design concepts, and customer experience may provide a way out for distressed local sports brands.