On behalf of the Board, I am pleased to present our interim results for the six months ended 30 June 2017.
Successfully Transformating into an Internationally Competitive Listed Corporation
This year marks the 10th anniversary since ANTA Sports’ listing. Throughout the past decade, sports industry has grown exponentially, having experienced an increase in consumption power, a transformation in retail channels and the rise of internet. Today, ANTA is a sportswear brand with a strong reputation across China, and we have successfully transformed ourselves from a traditional private company into an internationally competitive listed corporation with modern governance standards. Despite the intense competition within the Chinese sportswear market, our “Single-focus, Multi-brand and Omni-channel” strategy continues to deliver breakthroughs in terms of market share and profitability. During the period, as ANTA’s business continued to grow, along with a strong sales performance seen across the Group’s other brands, namely ANTA KIDS, FILA, FILA KIDS and DESCENTE, our revenue increased by 19.2% to RMB7.32 billion (2016 1H: RMB6.14 billion). Profit attributable to equity shareholders also rose by 28.5% to RMB1.45 billion (2016 1H: RMB1.13 billion), with basic earnings per share amounting to RMB55.98 cents (2016 1H: RMB45.15 cents). To allow our shareholders to benefit from the remarkable results of the Group, the Board declared an interim dividend of HK41 cents per ordinary share (2016 interim dividend: HK34 cents), representing a payout ratio of 66.3% of profit attributable to equity shareholders for the period (2016 1H: 65.5%)
Covering Mass and High-end Sub-markets with Our "Single-Forcus, Multi-Brand and Omni Channel" Operation Strategy
With a unique understanding of consumer trends and insights on China’s constantly changing retail market, we have leveraged our “Single-focus, Multi-brand and Omnichannel” strategy and our brand portfolio, including ANTA, ANTA KIDS, FILA, FILA KIDS, and DESCENTE, to reach different consumer segments across the market. We have also covered mass and highend markets, provided functional and fashionable casual sportswear, as well as catered for the differing and specific needs of consumers across different age groups, including adults and kids. Our “Omni-channel” strategy has been an unprecedented success. We strategically positioned ourselves and reached out to our target consumer base through the development of different retail channels, including street stores, shopping malls,department stores, outlet stores and e-commerce, allowing room for sales to grow further. Meanwhile, our new logistics center is expected to commence operation in early 2018, which will enhance the Group’s logistics capacity and delivery efficiency further. We will implement the “centralized distribution, direct store delivery” model to cater for the needs of ANTA’s and ANTA KIDS’s wholesale businesses as well as FILA’s, FILA KIDS’s and DESCENTE’s retail businesses, allowing the Group to response to any sudden change in consumer preferences and demands.
Creating Innovative Products and Brands
Incorporating the “Keep Moving” spirit into our drive for innovation has been one of the cornerstones of our success. Our robust innovative capabilities continue to deliver a wide-range of differentiated products, and will consolidate our leading position in the Chinese sportswear market. During the period, we entered into a “Trademark/ Copyright License Agreement” with the world renowned Chemours Company in relation to the Teflon EcoElite™ renewablysourced water repellent, and launched the apparel products incorporating Teflon EcoElite™ non-fluoride liquid-proof materials (non PFCs) in our 2017 Spring/ Summer Collection. In addition, we formed a strategic alliance with Noble Biomaterials to incorporate XT2® Technology, a best-inclass odor elimination solution, into ANTA’s fitness, training and leisure products, as well as the products of the Group’s other brands. We also introduced A-Livefoam technology to support the livefoam dynamic-net running shoes. This technology improved the level of comfort in the shoes as well as enhanced their breathability, which allows runners to exert much more power while maintaining stability, and provides even more protection for runners’ ankles. Meanwhile, our product design team became even more internationalized. Aside from setting up a design center in Japan, we opened our “LAUNCH” design center in the US, where our international design team will add to our innovative capabilities.
We not only pursue product innovation, but we also adopt an innovative approach towards our branding activities. During the period, we celebrated the achievements of Klay Thompson, a sharpshooter for the Golden State Warriors who helped his team reclaim its championship title at the 2017 NBA Finals, and launched our month-long Shock The Game campaign in China for the basketball icon. Over 30 million people watched the campaign live stream video, while its Weibo posts attracted over 7.7 million readers. The campaign not only successfully connected online and offline channels together, but showcased ANTA’s success in creating compelling brand stories in relation to its basketball products, and successfully boosted sales and took the value of ANTA’s brand to a new level. In addition, FILA reached another milestone in 2017 with the launch of the Blue series in China in January, which further expanded FILA’s customer base. Elsewhere, partnering with Staple, an US fashion brand, and Jason Wu, the renown US designer, FILA launched the Staple X FILA product series and the new Jason Wu X FILA 2017 Spring/Summer collection respectively, delivering customers personalized products that embodies FILA’s unique style. Meanwhile, the famous Chinese actress Gao Yuanyuan continued to feature in advertisements for FILA’s new products, which has established FILA’s brand and its products as elegant and fashionable. Meanwhile, our high-end DESCENTE brand continued to expand its retail network with the launch of its “AWAKEN!” marketing campaign. Not only did it open consumers’ eyes to DESCENTE as a brand, but also “awoke” and ignited their passion for sports and beauty. “AWAKEN!” reached into every part of the country and successfully raised awareness of the DESCENTE brand.
Enhancing Retails Management and Strengthening Distribution Channels
We continue to implement comprehensive retail-oriented measures and enhance retail management to help our retailers stay competitive as well as improve their profitability. In addition to implementing a streamlined distribution structure, we conducted thorough real-time analyses of retail performance and inventory movements gathered from our ERP system to create the best retail management strategy according to the latest market trends and changes in consumer demands. In addition, our database has helped us provide more precise future order guidance to our retailers, which helped to improve their flexibility and efficiency, minimize inventory risks and increase profitability.
We continue to leverage the advantages of our omni-channel strategy and apply management approaches to different channels for different brands and their target consumers. Aside from consolidating ANTA’s position in traditional retail channels such as street stores, we have increased our presence in shopping malls and department stores, which will enable us to adjust to changing consumption habits and shifting trend in foot traffic within the mass market. During the period, we launched our 8th generation ANTA stores which have created a completely different shopping experience to consumers and given their new decoration and fresh product display. As of 30 June 2017, the number of ANTA stores (including ANTA KIDS standalone stores) in China stood at 9,041 (end of 2016: 8,860). Elsewhere, FILA mainly sought to expand its retail network across the high-end market in mainland China, and had 869 FILA stores in China, Hong Kong, Macao and Singapore (including FILA KIDS standalone stores) as of 30 June 2017 (end of 2016: 802). Meanwhile, DESCENTE expanded into highend shopping malls in over 10 major cities in China following the opening of its first new store in August 2016. As of 30 June 2017, the number of DESCENTE stores in China increased to 21 from 6 at the end of 2016. Other than this, we strived to develop our e-commerce business by offering more exclusive products via our online platforms to meet the huge demands of online shoppers and to create synergy between our online and offline businesses.
Keep Moving and Flying High in the Next Decade
We believe our 10th listing anniversary is not only a celebration of the past 10 years, but a new starting point from which to take the next step forward towards new heights. With China’s support for the development of the sports industry under the 13th Five- Year Plan, the Chinese sporting goods market will continue to expand. The scale of the market is expected to further expand to RMB7 trillion by 2025. Our long-term goal is to establish the Group as a leader in the Chinese sportswear industry that surpasses international giants in terms of total market share in China. Meanwhile, the Group has a chance to leverage a number of opportunities, including those offered by the 2022 Winter Olympics in Beijing, government policies that encourage sports for all and make them more popular, increasing sports participation, public awareness of and engagement on health, and an increasing demand for personalized and differentiated sportswear products. With these opportunities in mind, we will continue to maintain our focus on the sportswear industry and fulfill consumers’ demands by maintaining our core strategy – “Single-focus, Multi-brand, Omni-Channel” – to ensure comprehensive coverage of customers and channels, and to maintain our leading competitive edge. Meanwhile, we will introduce even more differentiated products to cater for consumers’ needs and preferences, together with high profile and influential branding and marketing activities to gain greater market share in those sub-markets with potential, including the running, boxing, basketball, women’s fitness, cross-training and skiing. We will also upgrade our stores further in line with the Group’s transformation to provide a better experience for our customers. In addition, we will ride on the opening of our new logistics center – due to be put into operation early next year – to enlarge our retail operation capacity in support of the Group’s wholesale, retail, online and offline business operations in the long run.
On behalf of the Board, I would like to extend my gratitude to all our shareholders for their continuous support, and I would also like to express my sincere thanks to all employees for their dedication and contribution towards the Group. Going forward, we will endeavor to grow sustainably with our supply chain partners, brand partners, distributors and franchisees, ultimately creating even greater value for our shareholders.
Ding Shizhong Chairman Hong Kong, 15 August 2017