Starting in mid-March 2023, 361° was the first to release its full-year performance for 2022, with revenue of RMB 6.96 billion (about $1 billion), continuing to break historical revenue records and increasing by 17.3% year-on-year.
Li-Ning Group’s annual revenue reached RMB 25.8 billion (about $ 3.7 billion), a year-on-year increase of 14.3%. Anta Group’s full-year revenue in 2022 was RMB 53.7 billion (about $ 7.8 billion), an increase of 8.8% year-on-year.
Among the four major sports brands in China, Xtep has the fastest growth rate. The group’s revenue for the full year of 2022 was RMB 12.93 billion (about $1.8 billion), a staggering increase of 29.1% compared to the previous year.
According to its annual report, these four major groups jointly achieved an annual revenue of RMB 99.3 billion (about $ 14 billion), and with other brands such as Peak that do not need to disclose their annual revenue figures, Chinese sports brands have broken through the one hundred billion mark in 2022.
At the same time, compared with Nike and Adidas, the good momentum of Chinese sports brands is highlighted. During the reporting period in 2022 (December 1, 2021 to November 30, 2022), Nike’s revenue in Greater China was $7.165 billion (about RMB 51 billion), lagging behind Anta Group by RMB 2.23 billion.
And Adidas’ revenue in the Chinese market is about RMB 23.6 billion (about $ 3.4 billion) in 2022, which means that Anta and Li-Ning brands have surpassed Adidas in the Chinese market.
From the perspective of growth rate, Anta and Li Ning’s revenue growth rates have experienced a “cliff-like” decline, dropping from 56.1% and 38.9% in 2021 to 8.8% and 14.3% in 2022 respectively. After expanding their size, how to maintain stable and continuous growth is a problem that all Chinese sports brand groups must think about in advance.
According to foreign media estimates, Nike, the world’s largest sports brand, currently has inventory worth $9.3 billion, while Adidas also holds inventory worth as much as $6.7 billion.
Reported by the US business media Footwear News, Nike and Adidas will both reduce production by 30% to 40% in 2023. The contract factories located in Vietnam and Indonesia have planned to reduce their supply starting from this summer.
Nike and Adidas are both struggling with inventory issues, and domestic brands cannot avoid them either.
However, the performance reports of the four major brands did not focus much on inventory-related explanations. Anta claimed that “the inventory of the group’s main brands is currently at a healthy level,” while Li-Ning stated that “inventory turnover and age structure are maintained at a good level.” The statements from Xtep and 361° were also similar.
But the actual situation is not as good as the wording. In terms of inventory turnover days, all four major brands are on the rise.
Anta has the longest turnover days, increasing from 127 days in 2021 to 138 days. Li Ning has the smallest number of turnover days, but it also increased from 54 days to 58 days. Xtep and 361°’s turnover days have reached 90 and 91 respectively, approaching three digits.
In fact, the data of the four major domestic brands are still at a high level that needs to be vigilant because the extension of inventory turnover days will further increase costs and squeeze already small profit margins. This can be seen from the decline in gross profit margins of several brands. For example, Anta and Li Ning, which belong to the first echelon, saw their gross profit margins decline by 1.4% and 4.6%, respectively, in 2022.
Therefore, for Chinese sports brands like Nike, Adidas and even Lululemon, the “inventory crisis” has already shown signs of emerging. It is becoming quite important to make strategic arrangements in advance.