Press Releases

Download PDF Version

ANTA Sports Announces 2015 Interim Results, Interim Revenue, Profit and Gross Profit Margin for the Period Hit Record Highs

Growth Momentum Maintained Despite High Base; Low Double-Digit Growth for 2016Q1 Orders

(5 August 2015, Hong Kong) ANTA Sports Products Limited (“ANTA Sports” or “the Company”, Stock Code: 2020) is pleased to announce the unaudited interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2015 (the “period”).

Results Highlights

  Six months ended 30 June  
  2015 2014 Change
  RMB million RMB million  
Revenue 5,109.8 4,121.9 +24.0%
Gross profit 2,382.0 1,860.0 +28.1%
Profit from operations 1,266.9 986.1 +28.5%
Profit attributable to equity shareholders 965.3 802.8 +20.2%
Free cash inflow 952.5 824.8 +15.5%
       
  RMB cents RMB cents  
Basic earnings per share 38.65 32.17 +20.1%
       
  HK cents HK cents  
Interim dividend per share 30 25 +20.0%
       
Dividend payout ratio 62.8% 61.9% + 0.9p.p.
Gross profit margin 46.6% 45.1% + 1.5p.p.
Operating profit margin 24.8% 23.9% + 0.9p.p.
Margin of profit attributable to equity shareholders 18.9% 19.5% - 0.6p.p.

 

Financial Summary & Operational Performance

Revenue, Profit and Gross Profit Margin for the Period Hit New Highs; Strong Growth Maintained in Orders for the First Quarter of 2016 Despite High Base

  • Revenue of the Group increased by 24.0% to RMB5.11 billion for the period (2014 1H: RMB4.12 billion), hitting a historical high with a growth rate higher than the same period last year; mainly due to growing demand for the Group’s differentiated value-for-money products, and also due to notable growth in other businesses, such as the Kids, Fila and e-commerce businesses, indicating the unprecedented success of the multi-brand strategy
  • Profit attributable to equity shareholders rose by 20.2% to RMB965.3 million (2014 1H: RMB802.8 million); basic earnings per share amounted to RMB38.65 cents (2014 1H: RMB32.17 cents)
  • Gross profit margin also reached a historical high of 46.6% (2014 1H: 45.1%), while operating profit margin and margin of profit attributable to equity shareholders were 24.8% and 18.9%, respectively (2014 1H: 23.9% and 19.5% respectively)
  • The Board of Directors proposed an interim dividend of HK30 cents per ordinary share (2014 1H: HK25 cents), representing a payout ratio of 62.8% of profit attributable to equity shareholders for the period (2014 1H: 61.9%)
  • Trade fair results of ANTA branded products (including Kids sportswear series) for the first quarter of 2016 were remarkable, with order value showing low double-digit growth despite a high base. This is also the ninth consecutive quarter showing positive growth

Continued to Strengthen Sponsorship Resources and Leverage Marketing Strategy to Enhance Brand Equity and Differentiation

  • Signed an endorsement contract with Klay Thomson, a star shooting guard of the Golden State Warriors and tailor-made designated “KT FIRE” basketball for him, helping him win his first NBA Championship ring during the period
  • Unveiled a new campaign for running, “RUN WITH ME”, in order to maintain ANTA’s leadership in China’s running market
  • Launched the “Challenge 100”, ANTA’s functional running shoe, which supported the renowned Chinese ultra-marathon runner Chen Penbin in his challenge to finish running 100 marathons in 100 consecutive days. As an official partner of the COC, a series of running events were held when Chen Penbin undertook his marathon challenge in order to promote running and unite China in its bid to host the 2022 Winter Olympics

Continued to Improve Distribution Network Management and Enhance Overall Store Efficiency; Innovative Products Poised to Become the Group’s Growth Engine

  • Apart from implementing a streamlined distribution structure and comprehensive retail channel management, the Company also thoroughly analyses real-time retail data and closely monitors in-store inventory level, and provides more precise order guidelines to retailers according to the latest market trends and changes in consumer demand. The smaller, less efficient stores were consolidated while continuing to open bigger and more attractive stores in prime locations so as to enhance overall store efficiency
  • By the end of June 2015, the number of ANTA stores stood at 7,340 (end of 2014: 7,622); the number of Kids sportswear series stores stood at 1,334 (end of 2014: 1,228); the number of FILA stores in China, Hong Kong and Macao stood at 544 (end of 2014: 519)
  • In addition to the “Challenge 100”, ANTA’s functional running shoe applying exceptional materials and advanced technologies, the A-Web 3.0 running shoe, which provides better cooling and ventilation than the second generation version, was also launched, with a wide range of SKUs adopting different technologies in the sole offered, including A-Loop, A-Silo, A-Jelly and Super Flexi, etc., so as to cater for the needs of different types of runners. The response to the “Challenge 100” and A-Web 3.0 running shoes was overwhelmingly positive

 

Business Review

Continued to Enrich Diversified Sponsorship Resources and Innovative Marketing Initiatives to Consolidate Professional Brand Image and Differentiation

ANTA Sports continued to fully leverage its powerful and diversified sponsorship resources and its innovative promotional events to enhance brand differentiation and professionalism. The Company continued to work closely with the COC and the CSD by not only providing quality winning outfits for top Chinese athletes competing at influential sporting events, but also sponsoring 24 Chinese national teams from five Sports Management Centres, namely Water Sports, Winter Sports, Boxing and Taekwondo, Gymnastics and Weightlifting, Wrestling and Judo. All members of these national teams are equipped with professional sportswear tailor-made by ANTA for both competition and training, further strengthening the credibility of ANTA’s products and enhancing its brand image of representing China’s sports essence. During the period, a new advertising campaign for ANTA cross-training product series was launched, and was endorsed by renowned Chinese athletes such as two-time Olympic boxing gold medalist Zou Shiming, Olympic trampoline champion He Wenna, artistic gymnastics athlete Zhang Doudou, members of the Chinese national men’s weightlifting team, etc.

In April 2015, the Company tailor-made the “Challenge 100” running shoe for renowned Chinese ultra-marathon runner Chen Penbin, supporting him in his unprecedented feat of finishing 100 marathons in 100 consecutive days. A series of running events and interactive games via Wechat were also held so as to promote ANTA’s “Keep Moving” brand spirit and to unite China in its bid to host the 2022 Winter Olympics. Furthermore, along with the rapid growth of China’s running market and the surge in its running community, the Company unveiled the “RUN WITH ME” running strategy during the period, which has helped ANTA maintain its leadership in China’s running market.

Since becoming the official marketing partner of NBA China and licensee of the NBA in 2014, ANTA Sports further enriched the portfolio of “ANTA-NBA” co-branded series products during the period by introducing the 2015 NBA All-Star Game and Finals editions of basketball shoes. Moreover, Klay Thompson, a star shooting guard with the Golden State Warriors, became an ANTA endorser, thus further expanding and strengthening the “Basketball is Priceless” team, which had already included four NBA stars—Kevin Garnett, Rajon Rondo, Luis Scola and Chandler Parsons. The Company also tailor-made the designated “KT FIRE” basketball shoe for Klay Thompson. In June, after Thompson won his first NBA championship ring in the 2015 NBA Finals, the Company immediately launched a large-scale marketing campaign so as to strengthen ANTA’s brand recognition and to boost the sales of ANTA’s basketball products.

Emphasis Placed on Distribution Network Management; Strived to Enhance Overall Store Efficiency and Retailers’ Profitability and Competitiveness

During the period, the Company continued to optimise its retail-oriented strategy to capture market opportunities. Apart from maintaining close communication with retailers to gather customer feedback in order to develop products that are truly welcomed by the mass market, retail data, feedbacks and market trends were also shared with retailers on a regular basis. The Company also formulated more accurate product development plans, ordering guidelines and replenishment forecasts for retailers, and encouraged retailers to be flexible in taking replenishment orders so as to reduce their inventory risks while being able to capture market potential. Meanwhile, the Company made good use of several well-managed clearance channels – including factory outlets, discount stores and e-commerce platforms – so as to enable retailers to reduce inventory pressure at a faster pace. The Company also thoroughly examined retailers’ store opening plans and imposed strict requirements on them following the Company’s retail policies so as to strengthen their competitiveness and profitability.

Furthermore, the Company insisted on projecting a consistent store image across its nationwide distribution network, and continued to encourage retailers to upgrade their store layouts during the period. In the meantime, the Company further optimised visual merchandising during the period to put ANTA’s signature products—such as the “ANTA-NBA” co-branded series, “Basketball is Priceless” series, cross-training series as well as its professional running series—in the spotlight. The Company also strategically optimised various types of stores, and consolidated the smaller, less efficient stores while continuing to open bigger and more attractive stores in prime locations so as to enhance overall store efficiency. The numbers of ANTA stores and Kids sportswear series stores as at 30 June 2015 were 7,340 and 1,334, respectively (end of 2014: 7,622 and 1,228 respectively).

Proactive Development of E-commerce Business and Fila Business in the PRC

As online shopping and online-to-offline marketing are becoming big trends, ANTA Sports took action early on, launching its e-commerce business in 2009. The Company operates its own official online flagship store (www.anta.cn), and has cooperated with and opened self-operated webstores on popular e-commerce platforms. Meanwhile, authorised third party online retailers can open webstores selling ANTA products, subject to the Company’s unified sales policies. By selling in-season products and online exclusive products from ANTA, Kids and FILA lines, the Company’s e-commerce business has already evolved from a channel for clearance of aging inventory to a new, interactive platform for consumers looking to buy our unique products, and also provides them with the most convenient online shopping experience and the most reliable delivery and after-sales service. Meanwhile, the Company has allowed some outstanding offline distributors to sell ANTA products online with the aim of maximising mutual benefits between web-based and brick-and-mortar stores. During the period, ANTA Sports launched a “red packet” marketing campaign to celebrate the third anniversary of its official online flagship store and kicked off promotional activities on certain online shopping festivals to boost online sales.

The Company continued to actively develop another brand, FILA, in order to tap the enormous potential of high-end sportswear market. FILA stores continue to open in cities exhibiting the most potential. For instance, in May, the largest FILA flagship store in Hong Kong was launched at iSQUARE, Tsim Sha Tsui. As at the end of June, 2015 there were 544 FILA stores operating in China, Hong Kong and Macao (end of 2014: 519). Furthermore, two sub-brands, namely FILA KIDS and FILA INTIMO, were launched during the period, with the aim of tapping the promising children’s clothing and men’s underwear markets. Moreover, the FILA Ginny Line was introduced in cooperation with renowned American fashion designer Ginny Hilfiger, and the brand new FILA Red Line, highlighting the latest athletic fashion trend and adopting high-tech fabrics, was launched as well. While the trendy brand image and stylish products of FILA are endorsed by FILA ambassador Shu Qi, the latest designs for FILA’s “Marina di Portofino”—themed 2015 Spring/Summer collection and the “Anna Sui for FILA” 2015 collection were showcased to target consumers through advertising campaigns and extensive publicity on social media. More importantly, FILA is the Official Sports Uniform Sponsor of the Hong Kong, China Delegation, the Official Apparel Sponsor of the Hong Kong Table Tennis Association and the Official Sponsor of the 2015 World Ladies Championship (Golf), enabling the heritage and uniqueness of FILA products to capture the attention of yet more consumers at major international sporting events.

In overseas markets, the Company has selectively expanded its distribution network into the international market and worked closely with overseas retailers to achieve sustainable growth. Moreover, the Company leveraged exclusive sponsorship resources, renowned endorsers and eye-catching advertising campaigns to enhance ANTA’s international exposure and improve sales performance in overseas markets.

Unremittingly Improved Core Technologies and Enhanced Product Differentiation, with Innovative Products Becoming Growth Engine

ANTA Sports continued to promote product innovation in order to enhance product differentiation, and boosted responsiveness, cost-effectiveness and quality control of its supply chain to achieve sustainable development. During the period, the Company introduced over 770, 1,540 and 640 new style items to footwear, apparel and accessories portfolios, respectively, in order to cater for the needs of both professional and casual users. The Company also continued upgrading signature technologies such as A-Jelly, A-Silo, Super Flexi, A-Loop, etc., and launched the new A-Web 3.0 technology which provides better cooling and ventilation than the second-generation version. In addition, ANTA Sports also introduced the new “Challenge 100” functional running shoe during the period to support renowned Chinese ultra-marathon runner Chen Penbin in his quest to finish 100 marathons in 100 consecutive days. The shoe received an overwhelming response due to its excellent functionality and affordability.

Highly-efficient Supply Chain Ensures Business Sustainability

Offering comfortable and protective high-quality products to consumers is one of ANTA Sports’ major competitive advantages. Therefore, the Company continued to enhance its quality control capabilities throughout the entire manufacturing process. The Company adopted ISO international testing standards to ensure that the high quality of products is maintained, and partnered with quality OEMs and ODMs on further strengthening its supply chain so as to shorten the production lead time and to enhance flexibility in replenishment and maintain cost-leadership. Meanwhile, the Company further optimised production efficiency. During the period, the respective proportions of self-produced footwear and apparel and procured footwear and apparel were 47.6% and 15.2%, respectively (2014 1H: 54.3% and 15.9%).

Prospects

Looking ahead, the demand for affordable sportswear with good functional features will continue to grow due to the Chinese government’s support of the development of the sports industry and the popularisation of sports. With these developments, ANTA Sports will continue to leverage its solid fundamentals, strong brand equity and high degree of product differentiation, with the support of effective retail-oriented measures, so as to maintain the Company’s leading position in various markets and tap the market potential in the long run.

The Company will continue to bring diverse sports resources into full play, such as deepening the cooperation with NBA stars and NBA China, in order to further strengthen ANTA’s professional brand image in China’s basketball market, and to enhance customer loyalty to ANTA. Meanwhile the Company will encourage more people to engage in running and promote professional running gear featuring better functionality and quality by organising more “RUN WITH ME”-themed events across China.

The Company will continue to make the best use of its own powerful R&D resources and upgrade the unique and advanced technologies and incorporate them widely into the value-for-money footwear products, such as the newly-developed dual-layer support technology (A-Strata), so as to continue to provide comfort and foot protection for adults and kids. Moreover, all forms of apparel technologies and high-quality advanced fabrics for different sports and weather conditions will be applied to our diverse ranges of apparel products. The FILA brand of the Company will launch more eye-catching collections and will be highlighted in advertising campaigns featuring brand ambassadors of FILA, Shu Qi and newly-signed “Captain America” Chris Evans, to showcase FILA’s unique brand image and trendy lifestyle to high-end consumers.

The Company will continue to improve retailers’ profitability and store efficiency in order to maintain a solid presence in China’s high-potential cities; the Company will also roll out the brand new seventh-generation store layout to make further gains in market share. There is expected to be a total of between 7,200 to 7,300 ANTA stores, 1,400 to 1,500 Kids sportswear series stores and 550 to 600 FILA stores in the PRC by the end of 2015. The Company will also roll out more new online exclusive products on popular e-commerce platforms, and will further foster cooperation with these platforms and outstanding offline distributors so as to fully realise the potential of the e-commerce business.  

To maintain better control over distributors and franchisees in different regions, the Company will establish a business management platform which enables the Company to monitor and enhance retail store operations more effectively with the support of comprehensive data collected and mined from ERP system. Moreover, the Company will further optimise supply chain and quality management systems to reinforce suppliers’ quality control levels, and will enhance overall production efficiency and cost effectiveness through technological innovations in manufacturing.

Trade Fair Results for the First Quarter of 2016 and Same-store Sales Growth for the Second Quarter of 2015

The order value (at wholesale value) of ANTA branded products (including Kids sportswear series) for the Group’s trade fair in the first quarter of 2016, which was concluded in July 2015, achieved a low double-digit increase. Besides, 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 second quarter of 2015 increased by a high single-digit when compared to the same period of 2014.

Mr. Ding Shizhong, Chairman and CEO of ANTA Sports, said, “China’s sportswear industry is generally expected to continue to face intense competition and consolidation in the near term. Nevertheless, we have successfully regained growth through effective branding strategies and retail-oriented measures, and are likely to hit another peak in the full year of 2015. Meanwhile, the Chinese government’s support in expanding domestic demand, accelerating the development of the sports industry and the growing popularity of sports participation in China are favourable factors spurring the domestic sportswear market in the mid to long term. With measures such as making full use of our diversified and unique sponsorship resources, rolling out more outstanding products and exerting more effort on developing the e-commerce and Fila businesses, we shall be able to distinguish ourselves from peers with our leading position consolidated and create greater value for our shareholders.”

~ End ~

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 Group has an established an extensive distribution network with a leading presence in second and third tier cities in China under the management of regional distributors. The Group 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