Exploring the value anchor of ANTA Sports' multi-brand layout in its future three-year development plan.

Renowned management guru Jack Welch once proposed the concept of "growth is the king" in corporate management. He believed that company growth is a mindset, and only when the company grows, employees will feel more secure. In the business world, a great deal of pleasure comes from company growth.

In the sports goods market, ANTA Sports (02020) is undoubtedly a typical representative of enjoying the "pleasure" of sustainable growth as a practitioner of long-termism focusing on sports categories, an advocate of multi-brand strategy, and a pioneer in entering international markets.

Today, the "duopoly" pattern led by ANTA + Nike in the Chinese sports footwear and apparel market has become stable. In the international market, ANTA Sports has been making moves for a long time. It can be said that the "multi-brand" assets have become ANTA Group's greatest competitive advantage and the engine behind its phased success in the global market.

Because of this, whether ANTA Sports, this "giant in the sports world," can go further is a topic of concern for many people. And ANTA Sports has timely provided an answer, injecting a "strong heart needle" into the sports goods industry and giving investors in the group a "peace of mind."

Releasing a three-year development plan, continuing the growth "strong cycle"

On October 17th, ANTA Sports held a global investor conference in Beijing with the theme of "Multi-brand Synergy and Value," announcing its development plan for the next three years (2024-2026).

According to the group's plan, in the next three years, ANTA brand (referred to as "ANTA") will maintain double-digit growth in revenue; FILA brand (referred to as "FILA") will achieve a target revenue of 40-50 billion yuan; DESCENTE brand (referred to as "DESCENTE") and KOLON SPORT brand (referred to as "KOLON") will strive to create the group's third billion-yuan brand.

According to the Zhitong Finance APP, from 2014 to 2022, ANTA Sports' revenue has maintained steady growth for nine consecutive years, increasing from 8.923 billion yuan to 53.651 billion yuan, with a growth rate of more than five times. Even during the troubled years of 2019-2022 affected by the pandemic, ANTA Sports' annual compound growth rate of revenue still reached 16.5%, far higher than the 4.3% compound growth rate of the sports footwear and apparel market during the same period, and the 2.5% compound growth rate of the social retail industry. During the period of 2019-2022, ANTA Sports' shareholders' net profit attributable to the parent company had a compound annual growth rate of 12.4%, and the compound annual growth rate of earnings per share reached a high of 26%. In the first half of 2023, ANTA Sports achieved a revenue of 29.645 billion yuan, a year-on-year increase of 14.17%, and a net profit attributable to shareholders of 4.748 billion yuan, a year-on-year increase of 32.33%. Based on this trend, ANTA Sports is highly likely to achieve stable performance growth in 2023. The release of the three-year development plan will further continue the group's "strong cycle" of growth.

The "golden track" nature of sports footwear and apparel remains unchanged.

According to observations from the Zhitong Finance and Economics APP, one of the main reasons why ANTA Sports has the confidence to launch high-growth development goals is that, based on the industry's growth trend, the growth rate of the sports footwear and apparel industry continues to outperform other optional consumer goods, making it a "golden track" with huge potential for deep cultivation.

According to Euromonitor data, the global sports footwear and apparel market reached a scale of 371.73 billion US dollars in 2022. According to Guangfa Securities research report, the retail sales of China's sports footwear and apparel industry reached 362.68 billion yuan in 2022, with a compound annual growth rate of 11.7% from 2015 to 2022, far higher than the 2.8% compound annual growth rate of the overall footwear and apparel industry in China during the same period.

Over the past decade, leading sports footwear and apparel brands have demonstrated a strong "siphon effect", with the industry's CR5 market share increasing from 44.5% in 2011 to 57.1% in 2022. The market share of domestic sports brands increased from 24.6% in 2013 to 38.3% in 2022.

A large and diverse market inevitably contains many opportunities. From the perspective of changes in industry demand, the consumption of sports footwear and apparel presents a "fourization" trend of consumer segmentation, scene specialization, functional expertise, and personalized expression. New opportunities are emerging in new scenes and new tracks, with rapid growth in markets such as outdoor, children's, and women's.

Taking the outdoor track as an example, according to Euromonitor data, the growth rate of the outdoor sports market reached 19.4% during the epidemic, and it is expected to grow at a rate of 14.2% in the next five years. In the first quarter of 2023, on Tmall, camping, skiing, and cycling categories of outdoor sports products increased by 44%, 74%, and 41% respectively compared to the same period last year.

The size of the children's footwear and apparel market has reached 300 billion yuan. From 2019 to 2022, the compound growth rate of children's sports brands reached 12%, while the compound growth rate of children's leisure brands during the same period was -4%. Looking at the women's sports market, data shows that women's average fitness spending at the beginning of the year is 15-20% higher than men's, and the growth rate of women's outdoor equipment on June 18th and JD.com is four times that of men's. Women's participation in emerging sports such as camping has reached 60%, and about 2/3 of new golf players are women.

In this context, niche brands with distinct differentiation positioning have become an emerging force that outperforms mainstream brands and leverages the market competition landscape.

Currently, ANTA Sports has created a third growth curve represented by outdoor sports and continues to maintain high growth momentum. Descente relies on core categories such as golf and triathlon to enhance product design and innovation capabilities, launch multiple brand cross-border collaborations and customized community activities. KELME Sports has entered high-end commercial districts in first- and second-tier cities to increase the proportion of footwear products. In the first half of 2023, the revenue of all other brands increased by 77.6% year-on-year to 3.25 billion yuan, achieving a record-high growth rate and maintaining double-digit growth for 22 consecutive quarters.

To further seize opportunities in the niche market, ANTA Sports has recently focused on the women's sports market. On October 16th, ANTA Sports announced that the group, through a wholly-owned subsidiary, has entered into several purchase agreements with certain shareholders of MAIA ACTIVE Limited, with the condition of acquiring 75.13% of the equity of MAIA ACTIVE. After the completion of the acquisition, MAIA ACTIVE will become an indirectly non-wholly-owned subsidiary of ANTA Group.

In its research report, Orient Securities stated that the acquisition of MAIA ACTIVE by ANTA Sports will help the group supplement its mid-to-high-end women's business segment and build a multi-brand matrix to meet the different sports scene needs of consumers.

Strengthening "capability building" to solidify three core competencies

With the rapid growth of outdoor, children's, and women's markets, opportunities for new scenarios and product categories in sports footwear and apparel continue to emerge. ANTA Sports adopts a multi-brand development strategy, which effectively captures the mass to high-end market. The complete brand portfolio model not only helps prevent market instability but also strengthens the group's competitive advantage and achieves long-term sustainable development.

In this process, how to effectively manage multiple brands and create a good chemical reaction among the multi-brand matrix is a necessary question for ANTA Sports.

According to the Zhitong Finance APP, ANTA Sports provided an answer at the Global Investor Conference held on the 17th. In the future, ANTA Sports will adhere to the development strategy of "single focus, multi-brand, globalization" and focus on building three core competencies: "multi-brand collaborative management capability," "multi-brand retail operation capability," and "global resource integration capability." The strategic goal is to achieve the leading market share in China by 2025 and the global leading position by 2030.

Among them, the multi-brand collaborative management capability includes three levels. The first level is multi-brand layout and value creation. The group's three major brand clusters cover three core tracks, corresponding to three growth curves. Each brand cluster focuses on brand positioning and marketing, product planning and design, channel expansion and operation, and how to maximize value creation for consumers. The second level is multi-brand resource synergy and sharing. Innovation, digitalization, supply chain, and logistics resources are shared at the group level. The third level is multi-brand management and service support. Strategic management, financial risk control, human resources, IT systems, and other control and service functions can efficiently empower the front-end multi-brand operations through years of management mechanisms and standards.

In terms of multi-brand retail operation capability, ANTA Sports has over 30 years of channel management and terminal operation experience in the Chinese retail market. The main brands have already achieved industry-leading retail operation efficiency in their respective battlefields. In the future, the group will continue to maintain and expand this advantage and help newly acquired brands quickly build competitiveness in segmented areas. In terms of global operations and resource integration capabilities, ANTA Sports has a global presence with its brand footprint, retail channels, research and development network, supply chain, and production bases. It has 75,000 sales outlets in North America, Europe, and the Asia-Pacific region. It has established research and design studios in the United States, Europe, Japan, and South Korea, and has collaborated with more than 60 top scientific research institutions, universities, and over 3,000 upstream and downstream suppliers for joint innovation. In the future, the group will further expand the overseas development of Chinese brands and continue to open up the global pattern of the brand.

From the perspective of Zhitong Finance APP, whether it is the brand retail strategy proposed in 2013, the "single focus, multi-brand, omni-channel" strategy proposed in 2016, or the current implementation of the "single focus, multi-brand, globalization" strategy, it can be seen that ANTA Sports has the genes of self-innovation and the ability to adapt to changes.

The introduction of the "three core competencies" indicates that ANTA Sports has a clear understanding of how to strengthen its "capacity building" in the face of the complex and competitive domestic and international markets in the new era. This will provide long-term development support for the group and help it gain more "trust votes" in the capital market.

Data from Zhitong Finance APP shows that since the end of June, southbound funds have gradually flowed into ANTA Sports. As of the close of October 14th, southbound funds held a total of 263 million shares of ANTA Sports, accounting for 9.28% of the total shares. In the past 60 trading days as of October 16th, ANTA Sports has received a net inflow of over 2.4 billion Hong Kong dollars. The buying actions of investors indicate that ANTA Sports, guided by a clear strategy, is still a benchmark for value investment in the sports footwear and apparel industry. The growth and strong cycle of ANTA Sports is yet to be continued.