From the subdivision track into the lululemon, the light of performance growth has overshadowed the two giants Nike Inc and Adidas.
Recently, Canadian sportswear brand lululemon released its results for the second quarter of fiscal year 2022. Revenue in the second quarter of the fiscal year ended July 31, 2022 rose 29% from a year earlier to $1.9 billion, with a net profit of $289 million, according to the report.
Lululemon is growing steadily in the Chinese mainland market, with net revenue rising more than 30 per cent year-on-year and a three-year compound annual growth rate of nearly 70 per cent. Regarding the development of the Chinese market, lululemon mentioned when announcing the "Power of Three x2" five-year development plan in April this year that Chinese mainland is expected to become the second largest market of lululemon in the world by fiscal year 2026.
In contrast, Nike Inc and Adidas, both outsiders, continue to decline in the Chinese market.
In the Greater China market, Adidas revenue has declined for five consecutive quarters, and Nike Inc has fallen for three consecutive quarters. It follows reports that Rothschild, chief executive of Adidas, revealed that he had made a mistake in China and would leave office early next year, three years earlier than his original term.
In fact, such as combing the 2022 semi-annual reports of Anta Group, Li Ning Co. Ltd., Xtep, 361degrees and other domestic sports enterprises, the competition pattern of China's sports market has changed.
The most striking point is that Anta Group's revenue in the first half of the year surpassed Nike Inc China for the first time.
According to the financial report of Anta Group, the income of Anta Group reached 25.965 billion yuan in the first half of 2022, an increase of 13.8% over the same period last year. According to the data given by Anta Group, its first-half revenue volume is equivalent to 1.1 Nike Inc China, 2.1 Li Ning Co. Ltd. Company and 2.13 Adidas in the same reporting period.
Li Ning Co. Ltd. and Xtep also handed in good transcripts. In the first half of 2022, Li Ning Co. Ltd. 's revenue and profit increased by 21.7% to 12.409 billion yuan compared with the same period last year. Xtep's revenue increased by 37.5% to 5.684 billion yuan, and the net profit reached 590 million yuan, an increase of 38.4% over the same period last year.
The situation of players of sportswear brands is quietly changing.
Adi Nike was overshadowed.
On August 23, Anta Group announced its results for the first half of 2022. The report showed that Anta realized operating income of 25.965 billion yuan, while Li Ning Co. Ltd., who ranked behind Anta, had revenue of 12.4 billion yuan in the first half of the year. Xtep, who ranked third, earned 5.68 billion yuan in the first half of the year. Fourth place 361st degree revenue 3.65 billion yuan.
By contrast, Anta Group firmly occupies the first position in the domestic sports market, but also surpasses the performance of Adidas international sports brand in the Chinese market. Data show that Adidas's revenue in Greater China in the first half of the year was 11.785 billion yuan.
Anta said its revenue in the first half of the year was equivalent to 1.1 Nike Inc China and 2.13 Adidas in the same reporting period.
From the perspective of the whole sports market, compared with Chinese enterprises with continuous breakthroughs in revenue, international sports brands have encountered "soil and water disobedience".
On Aug. 4, Adidas disclosed its results for the first half of 2022. Revenue in Greater China was 1.723 billion euros, down 28.4% from the same period last year. Excluding exchange rate factors, revenue in Greater China fell 34.8% from the same period last year.
This is the fifth consecutive quarter of decline in Adidas Greater China. In addition to Adidas, Nike Inc has also declined for three consecutive quarters.
According to the market intelligence data of Magic Mirror, among the head overseas sports brands from March 2021 to July 2022, the sales of Adidas Taobao e-commerce platform showed negative year-on-year growth for one month in a row, while Nike Inc Taos e-commerce platform sales showed negative year-on-year growth for 12 months.
However, lululemon, which is popular on the track with yoga pants, has become a rare exception. According to Magic Mirror data, lululemon has been selling well on Taobao and Tmall platforms since 2020. According to the recently released Magic Mirror White Paper for the first quarter of 2022, lululemon's sales on Taobao and Tmall reached 560 million yuan in the first quarter of this year, an increase of 82.1 percent over the same period last year.
At the same time, the financial report shows that revenue and net profit are on the rise in the second quarter of the lululemon2022 fiscal year, up 29% and 39.42% from the same period last year. On the whole, compared with Nike Inc and Adidas, lululemon, which specializes in yoga pants, has a slight advantage in revenue growth and net profit growth.
Yang Dayun, a strategic expert in China's clothing industry, told time Weekly that from the overall performance in the past two years, the sports market demand tends to be saturated, and the growth trend of Nike Inc and Adidas, which originally accounted for a relatively high market share, is declining in the normal range.
Yang Dayun also added that the rise of domestic sports brands in the Chinese consumer market has also affected the performance of Adidas and Nike Inc. With the improvement of Chinese local enterprises' design ability, level and brand promotion ability to drive performance growth, the advantages of Nike Inc and Adidas will be gradually compressed.
Rothschild, chief executive of Adidas, admitted in an interview with the media: "We don't know enough about consumers, so we leave room for Chinese competitors who are doing better."
"Today's Chinese consumers like [products] have a 'Chinese feeling'. Adidas will certainly study what the 'feeling of China' is, and try every means to solve it, so as to find the feeling that belongs to Chinese consumers. Although it is difficult, it should not be an unbreakable problem for international well-known brands. " Rothschild said.
Darcey Jupp, an analyst at GlobalData Apparel, said Adidas has lagged behind its competitors, offering few products, and its strategy of relying on Chinese sales to expand has been hampered by the current state of the Chinese market.
But it should be noted that Nike Inc financial reporting statistical cycle and other brands are not the same, there is a time difference.
Anta Group, Li Ning Co. Ltd., Xtep and Adidas' first-half results range from January to June 2022, while Nike Inc uses data for the third and fourth quarters of fiscal 2022, that is, from December 2021 to May 2022.
According to this figure, Nike Inc's revenue in Greater China was $3.721 billion, compared with 23.681 billion yuan at the exchange rate on the day of the announcement. However, this does not include the June 18 major revenue promotion, nor does it include the revenue of Nike Inc's brand Converse.
We still need to close the gap.
Although the performance of the former big brothers in the Chinese market is weak, and the development momentum of domestic sports brands is relatively rapid, whether Anta or Li Ning Co. Ltd., there is still a long way to go to achieve international well-known brands.
Some people in the clothing industry told time Weekly that Anta competed with Nike Inc with the brand revenue of the whole group, which could not be regarded as "surpassing" in the real sense. Anta Group's multi-brand operation ability is praiseworthy, but on the brand strength of a single brand of Anta Group, there is still a big gap with Nike Inc.
Nike Inc's brand value rose 9 per cent to $33.2 billion, according to the 2022 list of the world's top 50 most valuable clothing brands released by Brand Finance, an international market research firm. Adidas brand value ranked 5th, Anta 17th and Li Ning Co. Ltd. 44th.
In fact, Anta and other domestic brands still face their own problems to be solved.
For example, although Anta Group has made a big breakthrough in revenue, its net profit performance is not as good as that of other domestic brands. In the first half of the year, Anta's net profit was 3.95 billion yuan, down 6.6 percent from the same period last year, while Li Ning Co. Ltd. 's net profit was 2.19 billion yuan, up 11.6 percent from the same period last year. Xtep's net profit was 590 million yuan, up 38.4 percent from the same period last year, and 361 degrees net profit was 550 million yuan, up 37.2 percent from the same period last year.
At the same time, the performance of Anta Group's FILA brand began to decline.
In the first half of 2022, the FILA brand achieved revenue of 10.78 billion yuan, down 0.5% from the same period last year, and operating profit of 2.426 billion yuan, down 22.8% from the same period last year.
Anta said that during the reporting period, the epidemic rebound and closure areas were mainly concentrated in first-and second-tier cities, and FILA was more distributed in these areas, so it was greatly affected.
In fact, the growth rate of FILA has already slowed down, and it is not surprising that there was a decline in the first half of the year. At the same time, the importance of FILA for Anta is self-evident. If it continues to decline, it will be a great challenge for Anta. " The above clothing industry insiders told time Weekly.
Whether it is Anta, Li Ning Co. Ltd. or Xtep, 361 degrees, domestic sports brands do have room for improvement in the basic research and development of their products.
From Anta's 2021 results, it can be found that its R & D investment accounted for 2.3% in 2021, compared with 1.83% for Li Ning Co. Ltd., 2.5% for Xtep and 4.16% for 361 degrees. However, according to relevant media reports, Nike Inc and Adidas account for 5% to 10% of research and development.
The forward-looking Industrial Research Institute reported that Nike Inc's total number of patents reached 4534, about eight times that of Anta, and the number of patents worth more than $5000 reached 661, about 22 times that of Anta.
Domestic brands also recognize the importance of research and development and continue to strengthen their professionalism.
Xtep said on Sept. 5 that in the next 10 years, he will invest 5 billion yuan to help China's road running industry, including product research and innovation, sports events and athlete support. Anta Group also estimates that the cumulative investment in R & D will exceed 20 billion yuan by 2030.