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ANTA Sports Announces Record-breaking Results for Full Year 2015, As the First Chinese Branded Sportswear Company with Revenue of Over RMB10 Billion

Launches “Single-focus, Multi-brand, and Omni-channel” Strategy to Scale New Heights, and to Achieve Sustainable Growth Through “Revolution, Innovation, and Efficiency”

(23 February 2016, Hong Kong) ANTA Sports Products Limited (the “Company”; Stock Code: 2020) is pleased to announce the annual results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2015 (the “year”).

Financial Summary & Operational Performance

Scaled Unprecedented New Heights among China’s Branded Sportswear Companies, with Revenue of Over RMB10 billion

  • Revenue of the Group increased by 24.7% to RMB11.13 billion for the year (2014: RMB8.92 billion), attributable to growing demand for the Group’s differentiated value-for-money products, as well as notable growth in other businesses, such as the Kids sportswear series, Fila business in the PRC and e-commerce businesses. Gross profit margin also increased by 1.5p.p. to 46.6% (2014: 45.1%)
  • Profit attributable to equity shareholders rose by 20.0% to RMB2,040.6 million (2014: RMB1,700.3 million) for the year, with basic earnings per share amounting to RMB81.66 cents (2014: RMB68.12 cents)
  • The Board proposed a final dividend of HK30 cents per ordinary share (2014: HK28 cents) and a special dividend of HK8 cents per ordinary share (2014: HK8 cents), which together with the interim dividend per ordinary share of HK30 cents (2014: HK25 cents) representing a payout ratio of 70.0% of profit attributable to equity shareholders for the year (2014: 71.1%)
     

Further Enhanced Brand and Product Differentiation, Seized Market Share and Strengthened Leading Position

  • ANTA continued to focus on sportswear products and adopted multi-brand strategy (ANTA, ANTA Kids, NBA, FILA and FILA KIDS) and omni-channel approach to capture opportunities in the mass to high-end markets and key retail channels in China
  • Klay Thompson, one of the top players in the NBA and a star shooting guard with the Golden State Warrior sand NBA Champion of the 2014-2015 NBA season, became one of ANTA endorsers.“KT1”, the first signature basketball shoe tailor-made for Klay Thompson, was launched in both the China and United States markets for the first time
  • ANTA unveiled a new campaign for running, “RUN WITH ME” and tailor-made supreme functional running shoes – “Challenge100” – in helping renowned Chinese ultra-marathon runner Chen Penbin finish 100 marathons in 100 consecutive days
  • ANTA has tapped the soccer market and kicked off an all-round “PLAY IS All” soccer strategy. ANTA also appointed Zheng Zhi, current captain in the China’s national soccer team, as ANTA soccer promotion ambassador
  • Renowned Hollywood actor Chris Evans became a FILA ambassador in the PRC. FILA has announced across-border collaboration with renowned fashion designer Jason Wu and held a world class fashion show for “Jason Wu X FILA” 2016 Spring/Summer collection
     

Maintained Distribution Network’s Competitiveness as Store Efficiency the Top Priority

  • Strictly executed various initiatives under the retail-oriented strategy and continued to enhance store efficiency and store image. By the end of 2015, the numbers of ANTA stores, ANTA Kids sportswear series stores and FILA stores stood at 7,031, 1,458 and 591, respectively. Around 50 FILA KIDS stores were opened during the year
  • Expanded e-commerce business to capture the tremendous demand from the growing number of online shoppers and to bring synergy to both online and offline retailers
  • The same-store sales of ANTA retail stores (excluding stand-alone Kids sportswear series stores) grew for 12 consecutive quarters. The same-store sales for the fourth quarter and the full year of 2015 increased by mid single-digit and high single-digit, respectively, when compared to the same period of 2014
  • The order value of ANTA branded products (including Kids sportswear series) increased for 11 consecutive quarters. The order value for the third quarter of 2016 achieved a high single-digit increase, on a year-on-year basis

Business Review

Leverage Unique Sports Resources to Reinforce Brand Differentiation and Promote Store Image

As a functional and mass market sportswear brand, ANTA continues to improve its good desirability and stand out from Chinese sportswear brands by riding on its unique sports resources in combination with its influential sponsorship resources, and effective advertising and promotional campaigns. During the year, ANTA continued to be the official marketing partner of NBA China and licensee of the NBA, and used the NBA logo and the logos of the current 30 NBA teams, the NBA’s legendary team sand NBA events on its basketball shoes and accessories. ANTA further enriched its portfolio of ANTA-NBA co-branded series products by introducing its 2015 NBA All-star Game and Finals editions of basketball shoes. Klay Thompson, one of the top players in the NBA and a star shooting guard with the Golden State Warriors, became one of ANTA endorsers. With the help of “KT FIRE”, basketball shoe tailor-made by ANTA, Klay Thompson won his first NBA championship ring in the 2015 NBA Finals, and ANTA immediately launched a large-scale marketing campaign celebrating his team’s win so as to strengthen its brand recognition and to boost the sales of its basketball products. “KT1”, the first signature basketball shoe tailor-made for Klay Thompson, has been available online and offline at ANTA stores in China as well as The Champs stores in Bay Area, San Francisco. This marked the first time that ANTA has launched endorser signature basketball shoes in both the China and United States markets.

The 29th Olympic Day Run, jointly organised by the Chinese Olympic Committee (“COC”) and the Beijing 2022 Olympic Winter Games Bid Committee, was held concurrently in 11 cities with a theme “RUN WITH ME”, which attracted 80,000 running enthusiasts. ANTA sponsored the Olympic Day Run for the seventh consecutive year. Famous athletes such as Olympic gymnastics champions Zhou Kai and Zhang Chenglong, gymnastics world champion Huang Huidan and elite gymnast Chen Siyi also attended the race in different cities. ANTA tailor-made the supremely functional running shoe “Challenge 100” for renowned Chinese ultra-marathon runner Chen Penbin, supporting him in his challenge of finishing 100 marathons across nine provinces in 100 consecutive days. This event was not only an unprecedented feat for Chen, but also a good opportunity to promote ANTA’s “Keep Moving” spirit and to celebrate China’s successful bid to host the 2022 Winter Olympics.

More importantly, ANTA fully kicked off its “PLAY IS All” soccer strategy to tap the soccer market through organising matches, training young soccer players and coaches as well as launching professional soccer boots that best fit the feet shape of China’s young soccer players. In addition, ANTA appointed Asian Footballer and current captain in the China’s national soccer team Zheng Zhi as an ANTA soccer promotion ambassador. ANTA also sponsored 24 Chinese national teams from five Sports Management Centres, namely Water Sports, Winter Sports, Boxing and Taekwondo, Gymnastics, Weight Lifting, Wrestling and Judo. ANTA’s strong association with the COC and Chinese national teams not only strengthens the credibility of its products, but also further enhances its brand image of representing China’s sports essence. Regarding its cross-training product series, ANTA kicked off a series of new advertising campaigns, including endorsements by renowned Chinese athletes such as two-time Olympic boxing gold medalist Zou Shiming, Olympic trampoline champion He Wenna, artistic gymnastics athlete Zhang Doudou, and members of the Chinese national men’s weight lifting team during the year.

ANTA has been named one of the “Best China Brands 2015” for the sixth consecutive year by Interbrand, the world’s largest integrated brand consultancy. It was also the only Chinese sportswear brand to be shortlisted for two consecutive years. This not only underscores the unrivaled strength of ANTA’s brand equity and competitive edge, but also reflects its strong public recognition across China.

Continued to Execute Retail-oriented Strategy to Optimise Distribution Network and Boost Store Efficiency

Leveraging its well-defined retail-oriented strategy, the Group successfully improved retailers’ competitiveness, store efficiency and responsiveness to the fast changing market. During the year, the Group continued to consolidate its retail-oriented mindset and appraisal system, requesting that retailers strictly follow the Group’s retail policies whilst also working closely with them to gather customer feedback in order to develop products that are truly welcomed by the mass market. The Group also shared market trends and retail data, gathered by its real-time monitoring system, with retailers. The Group provided its retailers with precise ordering guidelines and encourage them to be flexible in making replenishment orders in order to stabilise in-store inventory levels, prevent inventory pile-up and improve profitability.

The Group believes that the sustainability of a distribution network is mainly driven by store quality, including aspects such as location, size, efficiency, store layout, rather than on the number of stores. During the year, the Group continued to consolidate smaller and less efficient stores while opening bigger and more attractive stores in prime locations so as to enhance store efficiency and to stay competitive. The number of ANTA stores by the end of 2015 was 7,031 (end of 2014: 7,622).

Kids Sportswear Series, Fila Business in the PRC and E-commerce Business Continued to Bring Growth Momentum

As the first domestic sportswear brand to enter the kids sportswear market, ANTA has built a Kids sportswear series that has been well-received and that is well-positioned to capture the tremendous opportunities ahead due to the products’ credibility and affordability. In view of the strong encouragement and support for youth soccer participation and development by the Chinese government, ANTA launched children’s soccer boots with good functionality during the year. ANTA Kids soccer series has continued to achieve strong sales since it launched in the fourth quarter of 2015. The number of ANTA Kids sportswear series stores in China stood at 1,458 by the end of 2015 (end of 2014: 1,228).

FILA brand’s market presence and appeal continued to strengthen during the year. Hollywood actor Chris Evans, who is best known for his role as Captain America, became a FILA ambassador in the PRC, promoting sales and brand awareness of FILA in China. FILA also put effort in opening FILA stores in cities showing the most potential in China. The largest FILA flagship store in Hong Kong opened at iSQUARE, Tsim Sha Tsui last May while other FILA stores were renovated into the brand new 4.0 store layout in order to drive customer traffic, sales performance and store efficiency. By the end of 2015, there were 591 FILA stores operating in China, Hong Kong and Macao (end of 2014: 519).During the year, FILA launched FILA KIDS and FILA INTIMO, with the aim of tapping the promising potential in children’s clothing and men’s underwear markets. Around 50 FILA KIDS stores have been opened after the launch of FILA KIDS.FILA also introduced the brand new FILA Red Line highlighting the latest athletic fashion trend and usage of high-tech fabrics. FILA cooperated with renowned American fashion designer Ginny Hilfiger to integrate her simple, trendy yet elegant design style and FILA’s “Modern Vintage” essence into the FILA Ginny Line. More importantly, FILA worked in unprecedented cross-border collaboration with an ethnic Chinese New York-based fashion designer Jason Wu, who is most famous for designing dresses for Michelle Obama, First Lady of the United States. The fashion show of “Jason Wu X FILA” 2016 Spring/Summer collection drew much attention from consumers.

Products sold by the Group on its e-commerce channels include in-season products, and online exclusive products from the ANTA, ANTA Kids and FILA lines; therefore it is no longer a channel for clearing aging inventory, but has gradually become an interactive platform for selling its unique products. During the year, ANTA’s in-season signature products, such as Control-5WD basketball shoe series, A-Web 3.0 technology running shoe series, “Challenge100” as well as its new soccer boots for children, all received overwhelming responses and recorded notable sales at online ANTA stores. Echoing China’s “Singles’ Day” online shopping festival, the Group also offered promotions on its e-commerce channels and hit record- high sales on that day. Through diversified product selections, special marketing tactics, efficient logistics and comprehensive after-sales services, the Group’s e-commerce business was capable of staying ahead of competition, attracting higher customer traffic and generating more sales.

Strengthened R&D capabilities; Strong Recognition for Innovative Products and Brand Value

Implementing its retail-oriented strategy, the Group continued to emphasise the importance of product innovation, and R&D capabilities optimisation so as to bring greater product differentiation. During the year, the Group upgraded its A-Web 2.0 to A-Web 3.0 which provides better cooling and ventilation for the vamp. The Group developed and adopted a number of brand new technologies and advanced fabrics in all of its footwear and apparel products, such as A-Strata, A-Reno, A-Fit, A-Grip, A-Infrared Warm, A-Frozen Skin III, and A-Sports Energy. In addition, ANTA introduced an unprecedentedControl-5WD basketball shoe offering a better balance of pressure on the foot and a more comfortable fit. The technology can increase friction, stability and speed for basketball players, in particular point guards, during basketball games.

According to the latest results of “The23rd China Retail Consumption Statistical Analysis”, ANTA’s travel and sports shoes produced and sold by the Group ranked number one in terms of market share in China for 14 consecutive years, which demonstrated the continued recognition for its value-for-money, innovative products among consumers in the China mass market.

The Group continued to adopt ISO international testing standards to ensure that the quality of all products complies with international standards during the year. Its cohesive relationships with quality OEM and ODM, as well as its solid in-house production capabilities, granted the Group extra flexibility to meet unforeseeable demand in a timely and cost-effective manner. The Group also further strengthened its own supply chain so as to shorten the production lead time. During the year, the proportions of self-produced footwear and apparel and procured footwear and apparel were 49.0% and 15.9%, respectively (2014: 54.4% and 15.9%).

Prospects

Looking forward, the Group will continue to consolidate core competitiveness by leveraging and utilising its strong brand equity, further enhancing product and brand differentiation, refining management of retail channels and elevating the cost-effectiveness and responsiveness of its supply chains, all with a view to maintaining its leading position in the China market and to maintain growth momentum. 

Multi-branding is one of the Group’s key strategies for tapping the full potential in various markets in China. The strong influence of the NBA, ANTA-endorsed renowned NBA players and Chinese athletes will help strengthen customer loyalty to ANTA and ANTA Kids in its key sports markets, including running, basketball, cross-training and the newly-entered soccer market. The Group will also further foster ANTA’s unique image of representing the essence of China’s sports by bringing into full play its solid partnerships with the COC and 24 of China’s national teams throughout the Rio de Janeiro Olympics in 2016. In addition, “Captain America” Chris Evans will continue to promote FILA’s unique brand image and trendy collections to high end consumers with his appearance in FILA’s advertising campaigns.

The Group always make the best use of its R&D resources and regularly develop revolutionary new technologies to enhance its customers’ athletic performance and to cater to their specific needs. The Group will continue to upgrade its advanced technologies and incorporate them into its value-for-money functional sportswear. For FILA brand, the Group will launch the “Jason Wu XFILA” collection featuring Jason Wu’s unique fashion aesthetics and FILA’s “Modern Vintage” essence in 2016.

The Group will focus more on consumer experience with an aim of driving online and offline sales by offering innovative products that consumers in mass and high-end markets really desire. The Group will renovate its brick-and-mortar stores to provide a more pleasant and comfortable shopping experience, and provide convenient online shopping platforms with good interface, delivery and after-sales services. The Group will continue to implement retail-oriented measures to help retailers maximise their profitability, enhance their store efficiency, adopt the latest store layout and manage their orders and instore inventory. The Group will make further gains in market share by maintaining a solid presence in China. The Group expect there will be a total of between 7,000 to 7,100 ANTA stores, 1,700 to 1,800 ANTA Kids sportswear series stores and 650 to 700 FILA and FILA KIDS stores in the PRC by the end of 2016. In view of the rapid growth of online shopping, the Group will roll out more brand new online exclusive products on and foster its cooperation with popular e-commerce platforms, and will further take advantage of the power of Big Data analytics and social media marketing to create synergy and to maximise mutual benefits between its online and offline stores.

Same-store Sales Grew for 12 Consecutive Quarters

In respect of ANTA retail stores (excluding stand-alone Kids sportswear series stores) operated by distributors and franchisees of the Group, which have been in operation for more than one year, same-store sales growth (at retail value) of ANTA branded products for the fourth quarter of 2015 and the full year of 2015 increased by mid single-digit and high single-digit, respectively, when compared to the same period of 2014.

Order Value Increased for 11 Consecutive Quarters

The order value (at wholesale value) of ANTA branded products (including Kids sportswear series) for the Group’s trade fair in the third quarter of 2016, which concluded in January 2016, achieved a high single-digit increase, on a year-on-year basis.

Mr. Ding Shizhong, Chairman and CEO of ANTA Sports Products Limited, said, “Our brands – ANTA, ANTA Kids, NBA, FILA and FILA KIDS –continue to focus on sportswear and are well-equipped to tap the full potential of their target markets, benefiting from the Chinese government’s new two-child policy, as well as its measures to boost sports-related consumption and to accelerate the development of the sports industry and the growing popularity of sports participation. To gain market share from our competitors and to achieve long-term sustainable growth, we will strengthen our brands’ recognition with the support of strong influence of our sponsorship resources, endorsers, ambassadors and cross-border collaborations, and will offer more innovative, stylish, differentiated, and value-for-money products that fit consumer preferences and needs in different markets. Moreover, we will focus more on the consumer experience by bringing into full play Big Data and social media aiming to drive sales and create synergies among all our retail channels, including online and offline stores. Therefore, we will not only enhance store efficiency by optimising store size, location and product displays, but will also offer a more pleasant and comfortable shopping experience to customers by encouraging retailers to adopt our latest store layout and optimising online stores’ interface, functions, delivery and after-sales services. Riding on our solid fundamentals, strong brand equity, high degree of product differentiation and effective management of the distribution network and supply chain, we are confident that we can outperform our peers amid the intense competition in China’s sportswear industry and tap market potential in the long run.

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About ANTA Sports Products Limited

As one of the leading branded sportswear enterprises in China, ANTA Sports Products Limited primarily designs, develops, manufactures and markets sportswear, including sports footwear, apparel and accessories. The Company has established an extensive distribution networks with a leading presence in second and third tier cities in China under the management of regional distributors. The Company places great emphasis on branding by integrating sports resources and sponsorship, advertising and promotional activities and consistent store image to enhance brand and product differentiation. For the past 14 years, its footwear has been enjoying a leading position in China’s composed index on market share.

For further information, please contact:

ANTA Sports Products Limited
Investor Relations Department
Tel: (852) 2116-1660
Fax: (852) 2116-1590
E-mail: ir@anta.com / ir@anta.com.hk

Hill & Knowlton Asia Limited
Agnes Suen / Ka Wai Li
Tel: (852) 2894-6258 / (852) 2894-6252
E-mail: anta@hkstrategies.com