Key Points Summary
Anta's performance in the first half of the year was impressive (revenue of 43.5 billion yuan, up 12.9%, and profit of 9.487 billion yuan, up 34.9%). However, the driving force for growth has changed: in the past, it relied on its main brand and FILA, but now it primarily depends on "second-tier" niche brands such as Desant and Kelon (with a growth rate of 44.2%). The growth rate of its main brand has slowed down (only 4.8%) as it shifts from a high-end strategy to more stable operations. Although the second-tier brands have seen significant growth, brands like Langzhu and Mayaya are still in the red. In the future, Anta will face challenges such as managing multiple brands, coordinating with PUMA after the acquisition, and ensuring the stability of its main brand.
1. Growth No Longer Depends on the "Big Brother" – It's the "Younger Brothers" Taking the Lead
Anta's 12.9% growth rate in the first half of the year is quite fast, considering the overall decline in the sports goods retail industry (a 3.5% decrease in the first 7 months) and the weaker growth of competitors like Li Ning (2.8%) and Xtep (0.6%). However, the main brand only grew by 4.8%. The real drivers of growth are niche brands like Desant, Kelon, Langzhu, and Mayaya, which generated 10.69 billion yuan in revenue and contributed 66% of the company's revenue and profit growth, with a higher profit margin than the main brand and FILA (33.1%). For example, Desant has monthly store sales exceeding 3 million yuan, with 53 stores achieving annual sales of 50 million yuan, and they can maintain discounts above 30% without relying on price cuts. Kelon's growth rate is even higher (over 45%), and its store performance in the southern market has improved from 1.7 million yuan to 2.4 million yuan, breaking the dominance of the northern market. These brands have tapped into specific niche markets; for instance, the outdoor running event market grew by 31% in the first 5 months of this year, and the equipment market grew by 50%. They have achieved high growth by targeting these specific demands.
2. The Main Brand: Shifting from a "High-End Dream" to "Stabilizing the Foundation"
Anta's main brand previously aimed to move towards a high-end strategy (such as launching "Super Anta"), but this was unsuccessful. With the departure of CEO Xu Yang and the reduction in the number of "Portfolio" stores, the expansion of Super Anta was halted. The new CEO, Lai Shixian, has adopted a more cautious approach, focusing on mass-market professional sports. They have deepened their core product lines (such as selling 5.6 million pairs of running shoes) and expanded into shopping centers and outlet malls (closing less profitable street stores). They have also introduced "Lighthouse Stores" with monthly sales of 440,000 yuan. Anta has also taken the initiative to purchase inventory from franchisees to prevent arbitrary price cuts, which is rare in the industry. The role of the main brand has changed; it no longer drives growth but focuses on stabilizing revenue, profit, and cash flow, while supporting the second-tier brands with supply chain and channel resources.
3. Multiple Brands: Both a "Sweetness" and a "Poison"
Anta's multi-brand strategy seems successful so far, as each brand targets a specific niche market (Desant focuses on professional skiing, Kelon on outdoor sports, and Mayaya on women's sports), and they can share the company's supply chain, membership, and digital resources. However, there are challenges:
1. Acquisition Difficulties: There are few high-quality niche brands available, and Anta is cautious about new acquisitions (Ding Shizhong stated that they won't buy unless there are good opportunities). Without new brands, growth may slow down.
2. Management Burden: More brands mean higher management costs. Brands like Langzhu and Mayaya were still in the red in the first half of the year and need to clear inventory and optimize their channels before they can turn a profit by 2027.
3. Limited Synergy: Managing multiple brands involves distributing costs and integrating teams, which can lead to reduced synergy and become a burden if not done properly.
4. The PUMA Acquisition: The Most Complex "New Challenge"
Anta is acquiring PUMA, expected to be completed by the end of 2026. This is the first time they will not hold a controlling stake (only be the largest shareholder), so they cannot directly assign their management team. How will they transfer their operational expertise (such as their channel strategies in China)? How will they coordinate the global teams? How can they achieve strategic alignment without full control? These issues are much more complex than acquiring Desant and Kelon. For example, how will they integrate PUMA's global operations with Anta's Chinese resources? Can they help PUMA perform better in the Chinese market? These uncertainties could turn out to be significant challenges.
5. The Next Decade: Balancing Both Approaches for Stability
Anta's key to success in the next decade is to achieve a balance:
- Continuing to Drive Growth with the Second-Tier Brands: Can they create more brands like Desant and Kelon that generate significant revenue (over 10 billion yuan each)? Can Langzhu and Mayaya turn a profit on time?
- Stabilizing the Main Brand: Despite the slow growth rate, they need to maintain profit, channels, and consumer recognition to ensure the stability of their core business.
This is not only a matter for Anta but also a significant test for Chinese sports brands as they transition from relying on store expansion to brand management, and from being a domestic player to a global one. If they succeed, they could become a global sports conglomerate; otherwise, they may be stuck in a situation where they have multiple brands but lack strong growth.
In summary, Anta's current situation is mixed. While the second-tier brands are supporting short-term growth, it needs to address long-term issues such as the main brand's weakness, managing multiple brands, and coordinating with PUMA. Whether they can overcome these challenges will determine the company's success in the next decade.