Anta turnover, profit grow at slower pace

Anta Sports Products reported a slower growth in its turnover and net profit for 2011, but analysts said the slowdown does not indicate a bleak prospect for the sector.

"The coming 2012 UEFA European Football Championship and the London 2012 Olympic and Paralympic Games offer opportunities for another round of high growth in the sportswear sector, where growth has cooled down recently after the boom since the 2008 Olympic Games," Zhang Xiangyang, a sports industry analyst at Shenzhen-based Qianzhan Intelligence Co, told the Global Times Tuesday.

The Chinese sportswear company, based in Fujian Province, reported a turnover of 8.9 billion yuan ($1.4 billion) for 2011, up 20.2 percent year-on-year. Anta also said its net profit reached 1.7 billion yuan, an increase of 11.5 percent. The growth figures for both turnover and net profit are lower than the 26.1 and 24 percent of increase, respectively, in 2010, according to the company's annual report released Monday.

Li-Ning, another sporting goods giant in China, also expects its 2011 revenue to be 6 or 7 percent lower than that of 2010 and announced early this month to cut staff, raising concerns about an impending crisis for domestic brands.

The decline in the pace of growth was mainly attributed to "factors, including recent moderation of China's economic growth and consumption, rising retail operation costs and industry competition intensified by excessive inventory and irrational discounts," Linda Pui, a public relations staff for Anta in Hong Kong, told the Global Times.

Anta also reduced the pace of its expansion, with the opening of just 229 new outlets in 2011 compared with some 1,000 new outlets in 2010.

Some industry analysts believe Anta will face challenges in maintaining its rapid growth in the future.

Goldman Sachs forecasts Anta will see worsening sales till 2013 with a decline in orders. The investment bank said that in the second half of 2011, net profit growth of Anta is worse than expected and maintained its "sell" rating for the Hong Kong-listed sportswear company.

However, Zhang of Qianzhan Intelligence thinks Anta's growth slowdown is normal. "The slowing economy is weighing on every sector. A double-digit growth for Anta is not very bad in this context."

China began to see a boom in the sportswear industry since the 2008 Olympic Games. In 2009, the market scale of sportswear hit 62.6 billion yuan, and it is expected to have reached around 87 billion in 2011, according to Qianzhan Intelligence.

After a rapid growth for three years, some believe 2012 will be a testing year for the industry, as problems related to shrinking profits, rising inventories and declining orders will have a bearing on the growth and profitability, and will put pressure on companies to restructure and rethink their strategies, Securities Daily reported earlier.