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ANTA Sports Announces Record-breaking Results Aims to Hit Another Peak in 2015

Shortlisted for BrandZTM Top 100 Most Valuable Chinese Brands for 5th Consecutive Year, Outshines Peers with ANTA’s Strong Brand Equity

(11 February 2015, 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 2014 (the “year”).

Financial Summary & Operational Performance

● The Group became the first to clamber out of industry trough, regaining growth momentum with results hitting new highs

    ● The Group achieved remarkable results for the year due to the growing demand for differentiated value-for-money ANTA products, but also to notable growth in its other businesses, particularly in the Kids sportswear series, Fila business in the PRC and e-commerce business. Turnover and gross profit margin both hit historical highs, which increased by 22.5% to RMB8.92 billion for the year (2013: RMB7.28 billion) and by 3.4 p.p. to 45.1% for the year (2013: 41.7%), respectively.
    ● Profit attributable to equity shareholders also rose by 29.3% to RMB1.70 billion (2013: RMB1.31 billion) for the year, with basic earnings per share amounting to RMB68.12 cents (2013: RMB52.71 cents).
    ● To provide returns to shareholders, the Board proposed a final dividend of HK28 cents per ordinary share (2013: HK22 cents) and a special dividend of HK8 cents per ordinary share (2013: HK7 cents), which together with the interim dividend of HK25 cents (2013: HK19 cents) represent a payout ratio of 71.0% of profit attributable to equity shareholders for the year (2013: 72.4%)

● Further enhanced brand differentiation and consolidated professional image; grasped opportunities in various high potential markets by implementing multi-brand strategy

    ● ANTA formed an alliance with NBA China, not only making it the official marketing partner of NBA China, but also the first Chinese sportswear brand to be a licensee of the NBA, allowing it to launch “ANTA-NBA” co-branded products carrying both the NBA and ANTA logos in China
    ● Chandler Parsons, a rising NBA star, has joined our star-studded lineup of basketball endorsers
    ● Besides tailor-making outfits for the CSD to the Sochi Winter Olympics and the Incheon Asian Games, the Group also started its first-ever collaboration with two of China’s Sports Management Centres, namely the Gymnastics Sports Management Centre and the Weight Lifting, Wrestling and Judo Sports Management Centre, providing quality competition gear for a total of 24 Chinese national teams
    ● Adopted multi-brand strategy (including the FILA brand targeting the high-end segment and ANTA brand focusing on the mass market segment) and diversified product portfolio (including ANTA performance-based sportswear series, Kids sportswear series, “ANTA-NBA” co-branded series, etc.) in order to capture opportunities in various high potential markets

● Retail-oriented strategy achieved extraordinary results; stood out from peers due to strong execution capability

    ● Strictly executed various initiatives under the retail-oriented strategy such as formulating precise ordering, replenishment and store-opening plans for retailers, helping them effectively maximise profitability and prevent excess inventory    
    ● Further strengthened product differentiation, optimised the flexibility and efficiency of replenishment and enhanced the flexibility of the supply chain so as to satisfy unforeseeable demand for in-season signature products
    ● Continued to enhance store efficiency and maintain a strong presence in second- and third-tier cities across China

Business Review

Sponsorship resources continued to grow in strength; brand differentiation and professional image further reinforced

Brand equity is the most powerful asset in sustaining long-term growth. Riding on an effective and focused brand management strategy, ANTA has become one of the most desired sportswear brands in China, and the year was a fruitful one for the Group in successfully acquiring top-tier sponsorship resources. ANTA gladly became the official marketing partner of NBA China and a licensee of the NBA, and was allowed to use the NBA logo as well as logos of the current 30 NBA teams, the NBA’s legendary teams and NBA events on its adult and kids basketball shoes and accessories. This marks the first time that the NBA launched co-branded products with a domestic sportswear brand. In order to cater to the differentiated demand from adults and children, ANTA launched a series of basketball shoes with the NBA, while the first batch of the “ANTA—NBA” co-branded basketball shoes featuring eight popular teams and NBA themed accessories will also be rolled out. Consumers are not only able to purchase these co-branded products at over 2,000 offline stores in China, but can also purchase related shoes and accessories via our e-commerce channel. In addition, Chandler Parsons, a rising star in the NBA and starting small forward of the Dallas Mavericks, became an endorser of ANTA, joining the solid team of ANTA-endorsed NBA players that include Kevin Garnett, Luis Scola and Rajon Rondo. This, together with the alliance with NBA China, further enhanced ANTA’s professional image and influence in the basketball market. 

During the year, ANTA also began cooperation with two China's Sports Management Centres, namely the Gymnastics Sports Management Centre and Weight Lifting, Wrestling and Judo Sports Management Centre, bringing the number of Chinese national teams equipped with ANTA professional gear to 24, which not only makes our sponsorship resources to China’s national teams more comprehensive, but also creates synergy with ANTA’s cooperation with the COC and elite Chinese athletes. Furthermore, Chinese athletes achieved excellent results at both the Sochi Winter Olympics and Incheon Asian Games, which were held in February and October 2014, respectively, and were awarded top honours at the victory podium wearing our tailor-made “Champion Dragon Outfit” on numerous occasions. They stepped up to the podium at the Asian Games a total of 342 times at the Asian Games alone. This not only greatly enhanced brand exposure of ANTA products, but also substantially reinforced the brand image of ANTA’s representation of China’s sports essence and honour. To strengthen the association between ANTA and the COC, as well as to maximise the effectiveness of digital marketing, joint marketing campaigns were launched with various media channels during the Sochi Winter Olympics and the Incheon Asian Games, reaping good results.

Separately, the 28th Olympic Day Run - jointly organised by the COC, regional bureaus of sport and ANTA - with the theme “19 Cities Running Together”, kicked off simultaneously in 19 cities in China and attracted more than 80,000 running enthusiasts as participants across the country. This is the sixth year in which ANTA sponsored this massive event, and the A-Web 2.0 technology running shoe, which was ANTA’s key product in summer, provided a comfortable running experience for the runners in this event. 

Continued to execute retail-oriented strategy to boost efficiency and profitability of retail channel

Leveraging its well-defined retail-oriented strategy, the Group successfully improved retailers’ competitiveness, responsiveness to the fast changing market and store efficiency. 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 trend and retail data, gathered by its real-time monitoring system, with retailers, and provided precise order guidelines to stabilise in-store inventory levels and prevent inventory pile-up in order to stabilise retailers’ profitability and sustainability. Well-managed clearance channels – including factory outlets, discount stores and e-commerce platforms – enable retailers to reduce inventory pressure at a faster pace. In addition, the Group adopted flattened sales management and has streamlined its already lean and effective distribution structure so as to facilitate better interaction with retailers. Meanwhile, the Group projected a consistent store image across its nationwide distribution network and carried out the standardisation of product display equipment and POP materials, while retailers were encouraged to upgrade their store layouts in line with the sixth-generation store image in order to match quarterly marketing themes and build a consistent store image.

The Group believes that store quality, including aspects such as location, size, store layout, etc., rather than the number of stores, is more important for the sustainability of its distribution network. Therefore, in the ever-changing market, the Group maintained a prudent approach in expanding its distribution network, formulated its optimal store opening plan with retailers, and was devoted to enhancing their store efficiency and profitability. The number of ANTA stores by the end of 2014 was 7,622, representing a slight decrease of 1.7% from 7,757 by the end of 2013.

Kids sportswear series, Fila business in the PRC and e-commerce business continued to bring growth momentum to the Group

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. The Group is dedicated to offering the most stylish, protective and comfortable products for children aged 3-14. In addition to Kids basketball, outdoor, cross-training and lifestyle series, “ANTA—NBA” co-branded shoes and accessories have been added to ANTA’s Kids product portfolio since the start of its alliance with NBA China in October 2014. The number of Kids sportswear series stores in China stood at 1,228 (2013: 881) at the end of 2014.

Also, the Group spared no efforts in strengthening the FILA brand’s market presence and appeal. In February 2014, a large-scale FILA event was held in Shanghai to announce that popular Korean star actor Lee Min Ho has officially become a FILA ambassador and will endorse FILA’s trendy lifestyle brand image and stylish products with fellow FILA ambassador Shu Qi. He appeared at the event to witness the launch of the brand new “Anna Sui for FILA” collection—the result of an unprecedented cross-border collaboration between FILA and world-renowned ethnic Chinese fashion designer Anna Sui. Moreover, the latest designs for FILA’s “Santorini Blue”- themed 2014 Spring/Summer collection and the “Lago Di Como”-themed 2014 Fall/Winter collection are being fully demonstrated to target consumers. FILA was also an Official Sports Uniform Sponsor for the Hong Kong, China Delegation; the Official Apparel Sponsor for the Hong Kong Table Tennis Association and the Official Sponsor for the 2014 World Ladies Championship; and had also tailor made uniforms for the CCTV sports channel reporters at the 2014 FIFA World Cup, enabling the heritage and uniqueness of FILA products to capture the attention of yet more consumers at major international sporting events. As at the end of 2014, there were 519 FILA stores operating in China, Hong Kong and Macao (2013: 416).

Products sold by the Group on its e-commerce channels include in-season products, off-season products and online exclusive products from the ANTA, Kids and FILA lines; therefore it is no longer a channel for clearing aging inventory, but has gradually become a new and interactive platform for both online and offline shoppers. Distinctive products such as the A-Web 2.0 technology running shoe, A-Silo running shoe and ANTA-endorsed NBA players’ designated basketball shoes were sold simultaneously at the Group’s self-operated online flagship store, while basketball products carrying NBA logos were also introduced and were widely welcomed by customers. Product launch schedules, priorities and styles of e-commerce platforms are all managed to create synergy and to prevent competition between online and offline retailers. Exclusive products can only be found online.

Sustained innovation in products and technology; increased supply chain efficiency and enhanced flexibility

Implementing its retail-oriented strategy, the Group continued to emphasise the importance of product innovation, responsiveness in its supply chain, and cost and quality controls, which are the Group’s core competitive advantages which make it stand out from its peers. The Group further optimised its R&D capabilities to bring greater product differentiation, launching the revolutionary ANTA A-Web 2.0 technology running shoe during the year. The enhanced A-Web 2.0 technology featured in the vamp applies the most modern and popular knitting technology to provide a better fit and greater breathability. The sole adopts the innovative A-Loop technology and durable and slip-resistant rubber to provide greater comfort and support, making the shoe receive an overwhelming response from consumers. The Group also adopted advanced fabrics and self-invented apparel technologies such as A-Cool, A-Proofrain and A-Warm, etc. into its functional clothing for running and outdoor sports. During the year, the Group introduced over 1,800, 3,000 and 1,500 new styles to the ANTA footwear, apparel and accessories portfolios, respectively, to cater to both professional and casual users.

The Group also continued to adopt ISO international testing standards to ensure that the quality of all products complies with international standards. 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 and to allow better visibility on consumer demand; it also fully supported its supply chain partners to enhance their quality controls and workflow efficiency as well as to improve their responsiveness to market changes. On the other hand, the Group’s strategic mix of in-house and outsourced production allows it to better respond to market conditions and changes in consumer preferences. During the year, the respective proportions of self-produced footwear and apparel and procured footwear and apparel were 54.4% and 15.9%, respectively (2013: 48.9% and 17.0%).

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 as it aims to hit another peak in 2015.  

In order to achieve these goals, the Group will continue to elaborate its effectiveness and the synergy between its diverse sports resources and branding strategies. More eye-catching “ANTA-NBA” co-branded products will be launched to cater to the tremendous demand in China. The Group will enhance customer loyalty to ANTA and boost sales of ANTA’s value-for-money premium basketball products through the “Basketball is Priceless” team’s strong influence and popularity in China. To further differentiate ANTA brand from other domestic brands, the Group will continue to leverage its long-term partnership with the COC to root ANTA’s unique image of representing the essence of China’s sports. The Group will also make every effort to provide a full range of high-quality gear to its 24 sponsored China national teams, including the legendary gymnastics team, which has always been a strong contender for gold medals and will be a symbol of China’s pride in sports at different major sporting competitions in the coming years.

In addition, the Group will continue to implement retail-oriented measures to help retailers improve their retail performance, maximise their profitability, enhance their store efficiency and manage their orders and in-store inventory. The Group expects to have a total of between 7,400 to 7,500 ANTA stores, 1,500 to 1,600 Kids sportswear series stores and 550 to 600 FILA stores in the PRC by the end of 2015. In view of the rapid growth of online shopping, the Group will roll out more brand new online exclusive products on its ever expanding e-commerce platforms and will further cooperate with outstanding offline distributors to maximise the mutual benefits between the web-based and brick-and-mortar stores.

Furthermore, the Group will continue to provide comfort and foot protection for adults and kids by upgrading its advanced technologies such as A-Web 2.0 and A-Loop, which feature excellent breathability and shock absorption, respectively, into its value-for-money footwear products. More eye-catching FILA collections and new product lines will be launched through highly-effective publicity campaigns and in-store POPs featuring its brand ambassador to continuously showcase FILA’s unique brand image and trendy lifestyle to high-end consumers.

Meanwhile, the Group will establish a business management platform to monitor and enhance its retail store operations more effectively with the support of comprehensive data collected from its ERP system. The Group will refine its organisational structure and strategically recruit, nurture and retain talented people to strengthen its execution capability. The Group will further optimise its supply chain and quality management systems to reinforce its suppliers’ level of quality controls and to enhance overall production efficiency and cost effectiveness through technological innovations in manufacturing.

ANTA ranked among “BrandZTM Top 100 Most Valuable Chinese Brands”, with brand value surging by 18%

The fifth “BrandZTM Top 100 Most Valuable Chinese Brands” ranking was unveiled in late January 2015. ANTA, the only Chinese sportswear brand to be shortlisted this year, was ranked 71th, up two places compared to last year, with a brand value reaching US$400 million, a surge of 18% year-on-year. Most importantly, ANTA was shortlisted for the fifth consecutive year, and was the only sportswear brand to be ranked among the top 100 brands since the list was first announced in 2011, which clearly reflects the strong brand value and equity that ANTA possesses and which makes it stands out from peers. The “BrandZ™ Top 100 Most Valuable Chinese Brands” was conducted by Millward Brown, a leading global research agency, and commissioned by WPP, the world’s leading communications services group. The BrandZ rankings are the only valuations in the world that take into account the opinions of thousands of consumers, alongside rigorous analysis of financial data, market valuations, analyst reports and risk profiles. It is one of the most definitive and robust rankings of Chinese brand equity available.

Mr. Ding Shizhong, Chairman and CEO of ANTA Sports Products Limited, said, “Over the past few years, China’s sportswear industry as a whole has been facing challenges associated with a lack of brand identity and product differentiation, the overexpansion of stores and poor inventory management. While industry players are striving for revival, the performance of different brands has varied. Meanwhile, the Group has clambered out of the industry trough. I am deeply encouraged for not only regaining growth momentum but also recording a new high in our results for the year. The lack of product differentiation and intense competition are generally expected to speed up consolidation in China’s sportswear industry in the short-term. However, our strong fundamentals and effective retail-oriented measures make us capable of outperforming our peers and delivering sustainable growth and profitability. Moreover, it is generally believed that the expansion of domestic demand, the improvement in livelihoods, the acceleration of the development of the sports industry and the popularisation of sports in China will further drive demand for affordable sportswear with good features. Therefore, we will leverage our core strengths to maintain our leading position in various markets and to tap the market potential in the long run.”

Mr. Ding Shizhong also stated that it is a great honour for ANTA to be shortlisted in the “BrandZTM Top 100 Most Valuable Chinese Brands” for the fifth consecutive year, remarking that “Being the only domestic sportswear brand to be shortlisted in this very definitive ranking every year, ANTA has seen that the success of the strategy of, as well as the effort put into, elevating brand equity and the level of differentiation has been fully recognised. The robust results of the Group also demonstrate the unparalleled success of our brand-driven business model. We will continue to leverage our existing brand advantage and execute our highly effective multi-brand and retail-oriented strategies in order to achieve sustainability and bring robust returns to our shareholders.”   

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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 ANTA sportswear, including sports footwear, apparel and accessories. The Company has established extensive distribution network 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 13 years, the Company’s footwear has been enjoying a leading position in China composed index on market share.

For further information, please contact:

ANTA Sports Products Limited Hill & Knowlton Asia Limited
Investor Relations Department Agnes Suen / Ka Wai Li
Tel:        (852) 2116-1660 Tel:        (852) 2894-6258 / (852) 2894-6252
Fax:        (852) 2116-1590 E-mail:    anta@hkstrategies.com
E-mail:    ir@anta.com / ir@anta.com.hk