In the past two months, the leaders of the apparel segment of Hong Kong stocks and A-shares have successively "showed their muscles" through mergers and acquisitions.
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Following Anta (02020)’s announcement in September that it planned to spend nearly 4.7 billion euros to acquire AmerSports, a Finnish-listed sports goods company, Semir Apparel (002563.SZ), the leading A-share children’s clothing company, announced on October 9 that it had completed the acquisition of Kdiliz Group, a French high-end children’s clothing company. Through this acquisition, Semir has become the second largest children's clothing company in the world.
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Anta and Semir have launched large-scale mergers and acquisitions, creating such a perception to the market that large-scale clothing subdivision leaders will continue to take off through mergers and acquisitions, and the growth space for chasing them will be further compressed. In fact, such an assumption is not unreasonable, because when some large clothing companies are also acquired, other small and medium-sized clothing companies may find it difficult to find such a large target even if they have the conditions for mergers and acquisitions in the future.
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Fortunately, there is still endogenous growth if mergers and acquisitions fail. For example, Li Ning (02331) in recent years is a benchmark for rapid growth in performance through deep cultivation of existing businesses.
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The orders from the second quarter 2019 trade fair held by Li Ning Company in September 2018 achieved a low year-on-year growth of 10%-20%. In terms of tag price, franchised dealers' orders for Li-Ning brand products (excluding Li-Ning YOUNG) at trade fairs achieved year-on-year growth for 20 consecutive quarters.
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The latest calculation is based on the Li Ning sales points that have been put into operation at the beginning of the same quarter of 2017. As of the third quarter of September 30, 2018, the same-store sales of the entire platform achieved a low year-on-year growth of 10%-20%. In terms of channels, both retail (direct operation) and wholesale (franchise dealers) channels achieved year-on-year high single-digit growth respectively, and the year-on-year growth of e-commerce virtual store business was in the low range of 30%-40%.
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In the third quarter ended September 30, 2018, the retail sales volume of Li Ning points of sale (excluding Li Ning YOUNG) achieved a mid-year growth of 10%-20% year-on-year. In terms of channels, offline channels (including retail and wholesale) achieved mid-segment growth of 10%-20%, of which retail channels achieved mid-segment growth of 10%-20% and wholesale channels achieved low-segment growth of 10%-20%; e-commerce virtual The store business achieved a low growth of 30%-40%.
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In the third quarter, mainly driven by the same-store sales growth of more than 10%, Li Ning's retail sales increased by about 15% year-on-year, and the growth rate accelerated significantly. The reason why Li Ning can maintain a high same-store sales growth rate is not due to the increase in the number of stores.
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According to the announcement, as of September 30, 2018, the number of Li-Ning sales points in China (excluding Li-Ning YOUNG) totaled 6,345, a net increase of 78 from the end of the last two quarters and a net increase of 83 in the first three quarters. It can be seen that Li Ning's performance growth has gotten rid of the dependence on the number of stores a few years ago, and replaced by the company's breakthrough in the product side.
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In the official flagship store of Li Ning Tmall, the Wade Way series sneakers released by the company in recent years have a maximum price of RMB 1,009 (units are the same below), while the pre-sale price of Anta's latest Thompson series sneakers KT4 destruction version is "only" It is 808 yuan, which shows that Li Ning has been at the forefront of domestic sports brands in terms of high-end products.
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In terms of product sales, Li Ning appeared on the New York Fashion Week in February this year with a price of 899 yuan "Wu Dao" sneakers, with monthly sales of 2,232, contributing more than 2 million yuan in sales per month.
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In addition to the traditional business, Li Ning's new business, Li Ning YOUNG, also shows a momentum of rapid growth.
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According to the announcement of Li Ning, as of September 30, 2018, the number of sales points of Li Ning YOUNG in China totaled 677, a net increase of 46 from the end of the previous quarter, and a net increase of 504 in the first three quarters (taking over the authorized agent on January 1, 2018). There are 361 dealer stores under the company).
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The Zhitong Finance APP noticed that the number of Li Ning YOUNG sales points increased by 291.33% compared with the 173 at the end of 2017. The company has said that in the second half of the year, it will focus on developing the business of children's clothing and other sectors. It is expected that the number of children's clothing stores will reach 750 by the end of this year.
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From an industry perspective, under the background of the liberalization of the second-child policy and the fact that young parents born in the 1980s and 1990s have become the main consumers of children's clothing, the children's clothing industry has a good momentum of development. According to Euromonitor data, the size of China's children's clothing market in 2017 was about 179.6 billion yuan, and the CAGR from 2012 to 2017 was 11.1%, much higher than the clothing industry's 6.2%. The volume and price together drive the growth of children's clothing. In recent years, the annual sales growth rate has increased significantly, and the price has maintained a moderate increase.
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Therefore, the children's clothing market has become the cake of competition among major clothing companies. Chinese local sports brands have also followed Nike, Adidas and other foreign brands to tap new growth points in the field of children's shoes and clothing.
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For example, in addition to owning its own brand Anta Kids, Anta acquired high-end children's clothing brand KingKow in October 2017; for example, China Dongxiang (03818) core brand Kappa business in the first half of 2018 increased its total sales by 10.7% year-on-year, while its The children's clothing business increased by 16.28% year-on-year; for another example, 361 Degrees (01361) recently released operating data for the third quarter, showing that the retail sales of the company's 361° children's clothing brand products in the third quarter of 2018 (calculated by retail value) were higher than the same period in 2017. There was low double-digit percentage growth.
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To sum up, in the context of the high prosperity of the children's clothing industry, Li Ning's children's clothing business is worth looking forward to. Combined with the achievements of the company's high-end products, even if Li Ning does not pursue mergers and acquisitions in the future, the company's future development potential is also clear.