Chinese sportswear company Anta Sports Products has said it expects net profit for 2019 to rise at least 45 per cent from a year ago, following robust sales growth including an improved performance at its retail business.
This will mark the seventh consecutive year the Fujian-based company has had better-than 20-per-cent profit growth. It turned over $3.5bn (€3.2bn) in 2018, and reported record half-year revenues of $2.07bn in August this year. Anta will release its annual results for 2019 in March 2020.
Anta is one of China’s biggest sportswear brands, selling a wide range of products, including basketball shoes and clothing, running shoes and clothing, and lifestyle and outdoor products.
Anta, which listed on the Hong Kong stock exchange in 2007, has six major sportswear brands: Anta, Anta Kids, Fila, Fila Kids, Descente, and a line of co-branded NBA products. Anta, Anta Kids and the NBA products target the mass market, while the three other brands are positioned as high-end sportswear.
Anta took over Fila’s businesses in mainland China, Hong Kong and Macau in 2009. It has targeted the brand at younger customers. It launched a new sportswear series called Fila Fusion last year targeting trendier shoppers, and also opened two major stores in Shanghai.
In 2004, Anta signed a deal with the NBA to become an official marketing and merchandising partner of its NBA China division. Under the deal, Anta launched a line of NBA league- and team-branded footwear and accessories.
As of June this year, Anta had 10,223 retail stores. Fila stores in China, Hong Kong, Macau and Singapore accounted for another 1,788. Anta’s other brands accounted for more than 500 more retail outlets.
Sports consumption push
Chinese sportswear industry growth is being assisted by a government push to grow the sports industry and sports and fitness-related consumption. Ahead of the 2022 winter Olympics in Beijing, the Chinese government is putting a particular emphasis on promoting winter sports.
The resulting increase in consumer spending is one of the reasons behind Anta’s growth, says Ivan Zhang, an analyst and vice-president at financial services group Huajin Capital.
Zhang told SportBusiness: “The Chinese government’s consistent push and policies to grow sports and fitness consumption the past few years is a significant factor, with domestic retail spending on sports continuing to rise.
“45-per-cent growth in profits is a really big number considering that Anta are already the biggest sports company in China, and their numbers are much higher than the growth rate across the whole sportswear market.
“Consumers are spending more money on sports and being active – you can tell from the marathon fever in China this year.”
China’s booming running industry grew in value by 7 per cent in the last year, to reach ¥74.6bn ($10.6bn/€9.6bn), according to data from the Chinese Athletics Association.
By 2020, the government wants 700m people to be working out at least once a week, and the domestic sports industry to be worth ¥1.5tn, of which almost 70 per cent will be consumption of sporting goods and equipment.
Beijing 2022 effect
In March, Anta and a group of investors including Chip Wilson, the founder of women’s sportswear brand Lululemon; Chinese conglomerate Tencent; and Chinese private equity firm FountainVest Partners, jointly acquired Scandinavian winter sports equipment maker Amer for $5.2bn.
Amer owns winter sports and outdoor brands such as Atomic, Salomon, Arc’teryx, Peak Performance, Mavic, ENVE, Suunto, Wilson and Precor.
Anta secured a stake of about 58 per cent in the company, marking a significant step into the winter sports market ahead of the 2022 Beijing Winter Olympics and Paralympics.
Zhang believes that the Amer deal will help profits and revenue for Anta continue to rise.
“Winter sports consumption with Beijing 2022 will certainly be a positive factor, and ultimately companies such as Anta and Li-Ning (another Chinese sportswear company) face little competition in the Chinese market, and enjoy larger market shares than other domestic brands.”
Zhang expects the growth rate to taper off slightly next year, but “revenue and profits will continue to rise, helped by the launch of more retail stores, higher margins from Anta’s high-end brands, as well as fast growing online sales.”