Adidas Predicts Two Digit Growth In 2012

Although the flagship store in Huaihai Road, Shanghai, Adidas has not yet officially opened, the shop assistant confidently pointed to a pair of tiger shoe shoes with a tiger tail on the heels and told reporters: "after opening, these shoes will be sold. Out of stock "

The optimism of the salesperson is exactly the same as that of Gao Jiali, the managing director of Adidas Greater China. The latter told reporters without hesitation, in 2012, Adidas Greater China maintained two digit income growth. target Unchanged.

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Market analyst Ma Gang said that China's local sporting goods enterprises in 2012 can achieve a single digit growth is already good results, Adidas's two digit income growth target set against the above background, it is particularly dazzling.

For domestic sports companies, 2012 may not be the end of the world, but it should be regarded as the most difficult year in the last 10 years. The largest Li Ning Co of China's local sports brands, Li Ning Co orders grew by zero in the second quarter of last year.

Anta, the second most popular local sports brand, is no better. Compared with the same period in 2011, the growth rate of orders for Anta in the first half of 2012 was "low single digit".

PEAK, another local sports brand, is in a better position, but in the second quarter of 2012, the volume of orders has been hard to reach the two digit growth level.

The situation in China should be worse than the three companies mentioned above. The dismal performance of Zerbib, the chief executive, announced his resignation in less than a year. Chen Yihong, chairman of the board of directors, took over as chief executive in the hope of turning the tide.

Go deep into the rear area of Chinese brands

Gao Jiali's bottom line comes from the huge expansion of Adidas in China in 2011.

It has opened about 1000 new stores in China. The significance of this is that in the sporting goods market in China, the number of new stores is often equivalent to the company's new performance.

According to the data released by Adidas, in 2011 1~9, the total revenue of Adidas Greater China was 900 million euros, and sales revenue increased by 28% compared with the same period last year, and all brands achieved two digit sales growth. There is no doubt that the huge increase in the number of new stores has contributed.

Gao Jiali said that about half of the newly opened 1000 stores are located in small and medium-sized cities. Gao Jia Li also added a sentence that might make the head of the local sports brand feel a stabbed. "China's local sporting goods companies are in poor condition and sales growth is slowing down. For Adidas, it provides an opportunity for development."

Including Lining, Anta and other local sports brands, small and medium-sized cities have been the main base for the growth of these companies. But after 10 years of rapid development, the mentality and consumption orientation of consumers in small and medium-sized cities are becoming more conducive to the changes of Adidas and Nike cross country sports brands. Ma Gang believes that consumers in small and medium-sized cities are originally loyal consumers of products such as Lining and Anta. These consumers are growing and purchasing power is gradually increasing. Now they need more brand and more international products. Adidas and Nike are now entering small and medium-sized cities, and are catering to the needs of these consumers' consumption upgrading.

Too optimistic?

Gao Jiali told reporters that he did agree with the view that China's urbanization and modernization process will make consumers' purchasing power continue to increase, which will provide a basis for Adidas's performance to achieve two digit growth.

But in Ma Gang's view, despite its strength, Adidas's new year's goal of achieving two digit revenue growth is still too optimistic. He asked: "Adidas has opened about 1000 new stores this year, can we open so much next year? Another question, what is the profitability of Adidas's new store?"

Previously, local sporting goods companies in China, in order to maintain sustained growth in performance, would strongly request dealers to order as many products as possible at the order meeting. After the dealers get these goods, the figures of the listed companies are pretty good, but the goods are actually stored in the dealer's storehouse and become inventories.

This is also the plight of Adidas in 2009. In that year, its inventory in China was high and had to be dealt with at a discount, resulting in negative growth in revenue.

Gao Jiali said Adidas has learned from its experience in 2009, and now it will confirm the inventory level with dealers every month. If there is an exception, it will support distributors to promote sales and reduce their inventories to a reasonable level. He said: "my dealer now tells me that the level of sales at the same store exceeds that of other competitors, which means that the goods are actually bought by consumers rather than in warehouses."