ANTA is seeking new blockbuster products

Author | Wang Xiaojun

Editor | Huang Yu

In this major sports year last year, leading sports brands should have made a fortune, but due to the overall decline in the apparel industry, these brands barely managed to stabilize their performance.

Recently, ANTA released its 2024 operating performance announcement. The announcement shows that for the entire year of 2024, the retail sales amount of the main brand ANTA (calculated at retail value) achieved a positive growth in the high single digits (i.e., 7% to 9%) compared to 2023. Another flagship brand, FILA, achieved a positive growth in the mid-single digits (i.e., 4% to 6%) in retail sales compared to the previous year.

Although it is still growing, the growth rate is not high.

The impressive results belong more to niche brands. The announcement indicates that the retail sales amount of all other brands under ANTA achieved a positive growth of 40-45% year-on-year.

Considering the overall market situation, ANTA's overall performance is relatively good. The market has recognized this achievement. The day after the announcement was released, ANTA's stock even saw a sharp rise.

For a long time, in ANTA Group, the main performance has been contributed by the two major brands, ANTA and FILA.

Taking the 2024 semi-annual report as an example, ANTA's total revenue reached 33.735 billion yuan. Among them, ANTA's revenue for the first half of 2024 was 16.077 billion yuan, accounting for 47.7% of the revenue; FILA's segment revenue was 13.056 billion yuan, accounting for 38.7% of the revenue; other brand revenues were 4.6 billion yuan, accounting for 13.6%.

However, currently, the main brand has already grown large, and its growth rate has slowed down, making future growth potential relatively limited. Although the other brands under ANTA currently account for a small proportion, their growth momentum is significant, and many of them are considered key to ANTA's future growth.

Previously, ANTA acquired FILA and cultivated it to become the second-largest brand comparable to the main brand, which allowed ANTA to accumulate experience in operating new brands. Thus, ANTA began a series of acquisitions and is committed to contributing growth to the overall group through these acquisitions.

It has been proven that the new brands acquired by ANTA in recent years have performed well, achieving good results in the competition for the middle class, with KOLON SPORT and DESCENTE being the most representative.

KOLON and DESCENTE are managed by ANTA's "second generation" Ding Sirong and Ding Shaoxiang. As brands managed by the younger generation, these brands are very close to the preferences of young middle-class consumers, focusing on lifestyle. Riding the trend of Gorpcore (outdoor wear entering urban life), these two brands are becoming everyday casual wear for an increasing number of middle-class consumers.

In the first half of 2024, DESCENTE (China) achieved revenue of over 3 billion yuan, and previously informed sources indicated that because DESCENTE's peak season is in the second half of the year, the annual revenue is expected to approach 10 billion yuan.

Just like the influence of Arc'teryx comes from outdoor hiking, DESCENTE, true to its name, focuses on skiing as its main sport. On social media, it is among the new four treasures of middle-class sports alongside Salomon, sis, and on, emphasizing a certain level of recognition within the community, maintaining a small yet beautiful persona, and attracting middle-class consumers with purchasing power Although KOLON made its move later, its current performance growth is impressive. In the first three quarters, its revenue increased by as much as 50%, making it the fastest-growing brand in the group. Moreover, in the second half of this year, KOLON continues to expand, opening stores in key business districts and airports in cities like Beijing and Shanghai.

In recent years, many consumers have started to notice the KOLON SPORT shopping bags featuring the logo of two small trees, and KOLON is also pushing into a broader market.

For consumers purchasing KOLON SPORT, the sentiment is that "with so many North Face products on the streets, both real and fake, it’s better to choose something less popular that no one wears." This characteristic aligns well with the logic behind the popularity of brands like Canada Goose and Miu Miu in recent years; many middle-class consumers still prefer fresh brands in apparel.

Additionally, KOLON's products themselves have become a reason for many consumers to buy. Few brands can elevate the aesthetics of outdoor sportswear, but KOLON's three-in-one jackets have achieved a professional level in material and design, with colors that are trendy in the recent years' Morandi color palette.

Furthermore, KOLON has tapped into the quiet luxury trend that has been favored by middle-class women in the past two years, with spokesperson Liu Shishi perfectly embodying this style—cool and elegant. Some consumers directly regard KOLON as the "lululemon of the outdoor world."

Besides the aforementioned brands, the performance announcement does not include Amer Sports (the parent company of Arc'teryx, Salomon, and Wilson), which is the largest shareholder of ANTA and a key factor in the capital market's optimism towards ANTA. The most representative brand is Arc'teryx.

Although many outdoor professionals feel that Arc'teryx has lost its athletic spirit from its heyday, the performance data shows that middle-class men in China still love Arc'teryx. Amer Sports reported a 17% year-on-year revenue increase to $1.354 billion for the third quarter of fiscal year 2024, with the technical apparel segment, including ARCTERYX and Peak Performance, seeing a 34% year-on-year revenue growth to $520 million.

KOLON, Descente, Arc'teryx, and many other brands under their umbrella are accelerating and are becoming the next "FILA" under ANTA.

Currently, although ANTA is performing relatively stable in a challenging environment, the challenges it faces are real. The brands under ANTA are betting on the trend of consumption upgrading, but consumers are becoming increasingly cautious, which casts a shadow over the future growth of these brands.

After reaching a growth ceiling, what new stories can ANTA tell? Standing at the peak, ANTA needs to continue planning for the future