Shop Goal Remains Unchanged, New Store Mode Is Weak -- Reflection On Lining Mode

"Sporting goods retail"

Ding Wu excitedly announced the success of the 31st order meeting. At the end of December 2010, micro-blog's "Ding Wu" was pleased to claim that the order of the 31st order would be "good". However, after everyone congratulated the stock market is expected to soar, Ding Wu deleted the message and even cancelled micro-blog.

President Lining's "victory" Manifesto appeared at the time when Lining was frequently questioned by the capital market. Lining's share price plummeted from the poor performance of the second quarter of 2011, and the investment institutions sold the dilemma. Let the industry see that the sports apparel industry is now unable to sustain the growth mode of increasing its performance by relying on a large number of new stores. Lining, as the leader and driver of this model, seems to indicate the arrival of labor pains in the sports industry, although some "follow" brands such as 360 degrees are still strongly adjusting their potential in the two or three line market.

Singing and falling Lining

Thanks to the favor of the capital market, the domestic sporting goods industry has developed rapidly in recent years. After the hot clothing such as casual wear, the clothing industry has another growth pole.

However, it is also a "quick" response of the capital market, which makes the industry see the weakness of the "new store mode" from Lining, the leading enterprise.

The capital market is looking down on Lining, which directly caused Lining's share price plummeting at the end of December 2010.

On the two day, the share price dropped by 21.88%, and the market value shrank by 4 billion 896 million yuan, and the performance of the whole year in 2010 dropped by 43.5% from the beginning of the year to the end of December, showing the fear of Lining's development mode in the capital market.

Related investment institutions are Lining's important booster of this downward trend. In December 20, 2010, JP Morgan sold 12 million 883 thousand shares of Lining at a price of HK $18.24 per share; on the 21 day, 9 million 774 thousand shares were reduced at HK $17.07 per share; on the 22 th, JP JP lowered 10 million 699 thousand shares again, with an average price of HK $17.31 per share.

So far, its shareholdings have shrunk to 11.77%.

The US capital group also sold 651 thousand Lining shares at HK $17.26 per share on the 22 day.

The 2 agencies cash in HK $598 million in just 3 days.

At the same time, major brokerages have reduced Lining's investment rating from original "holding" to "selling". Deutsche Bank claims to have lowered the target price of Lining to 40%, to 14.68 Hong Kong dollars, the Lining target price of Goldman Sachs has been reduced by 15%, Morgan's general rule has dropped 23% Lining's target price and so on.

Lining's "multi store mode" is all pointing to the "bad news" of "going all the way". "The growth mode that used to rely on a large number of new stores has been difficult to sustain". The shrinking of profits is letting Lining and even the "new store mode" get into trouble.

New store model is weak

As a direct fuse of Lining's decline, Lining's poor performance in the second quarter of 2011 ordered the market to see that Lining's ability to make profits has become increasingly weak. According to Lining's announcement, the retail price of Lining's clothing products and footwear rose by more than 8% in the second quarter of 2011, but the number of orders decreased by 7% and 8% respectively, and the total value of orders decreased by 6% compared with the same period last year.

On the one hand is the opening of a large number of new stores, and on the other hand, the agents are increasingly cautious about their purchases. Lining, the first to break through the 7000 retail stores, is faced with the problem that the growth of store size is not directly proportional to the growth of performance.

A similar decline in store performance is a wake-up call for the sporting goods industry in the era of "ten thousand shops".

Hubei's clothing agents are pleased with Qingping's view that at present, the number of sports brand stores is competing to shuffle, and he is satisfied with the decision to quit a sports brand agency business a year ago.

"Now, the homogenization of sports brands is too serious, there is no product characteristics, everyone is relying on quantity competition."

To Qingping, "I quit the sports brand agency business because I didn't make money, and a large number of brands were expanding, so my agent's brand also wanted us to place more orders and open more stores, but the product itself had no distinguishing features, and it had no big difference from other brands, which caused our profits to be very low or even lose money, so we could only give up."

Worries about Qingping's sporting goods industry are becoming increasingly apparent. The decline in the performance of Lining, a leading company, shows that the single store operation of sports brands is facing challenges after large-scale expansion.

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"In Wuhan, according to our observation and measurement, the sports brand shops with our center commercial street are basically not profitable, accounting for more than 90%."

To Qingping.

Deng Tao, the brand manager of Zhejiang Han Bo Marketing Limited, shares the same view with Qingping. In his view, Lining's current dilemma is the further enlargement of the sports industry's past development pattern.

"At the moment, I do not see clearly the competitiveness of sports brands, I can not see their competitive means.

Although they are enthusiastic about promotion and sponsorship, there is little difference in product design, including research and development, and sports brand.

Now their expansion is so great that their personal feelings are mainly because they have developed too slowly in the past few years.

Deng Tao said, "this reminds me of Fujian's menswear brand in the past. It is also homogenization of vicious competition and scale expansion.

From this, I feel that the current sports brand will shrink and precipitate after the expansion boom, and then usher in a new stage of development.

Perhaps Lining's current predicament and its active adjustment are the beginning of the overall shift and precipitation of the sports apparel industry.

Shop goal unchanged

Lining CEO Zhang Zhiyong explained in a recent performance of Lining's poor market, "the sports goods retail market is under heavy pressure.

On the one hand, the growth mode of relying on a large number of new stores has been difficult to sustain. On the other hand, the cost of operating terminal retail stores is increasing, which makes Li Ning Co dealers more cautious about the growth prospects of the next year.

Dealers' caution stems from the fact that profits can't be guaranteed. Thus, the enthusiasm of new stores is reduced. Dealers in the existing storefront are reluctant to take risks to purchase more goods.

This has led to a "stagnation" in the growth pattern of new stores. The number of new stores has begun to grow, while the growth rate of single stores has declined. The prospect of sports brand profits has been questioned.

"Obviously, (Lining's stock price plummeted) partly stems from investors worried about Lining's performance slowdown.

This may affect investors' confidence in the sporting goods industry.

And then bring more pressure to the future two or three line brand landing in the capital market.

Luo Shijin, an analyst with China's sporting goods market, said: "the crisis of Lining is a good warning for sports brands. After years of market enclosure campaign, the marketing focus of sports brand should be shifted from the number of stores that only pursues stores to the improvement of single store performance.

China's sporting goods market is shifting from the previous era of horse racing to intensive farming. It is imperative to improve the profitability of terminal stores.

Represented by Lining, relying on a large number of new shops in the sports apparel industry growth mode, in the face of the capital market Lining encountered cold capital, facing the adjustment of the growth mode of development requirements.

However, it is also a critical moment for the industry to change and develop, and brands need to improve their profitability.

"At the time of adjustment, they will still prove their space and potential in the retail market. Sports brands still need enough new stores to prove their market ability to regain the favor of the capital market."

As a result, Li Ning Co spokesman Zhang Xiaoyan still said after the stock price crash, "the number of 7900 stores this year remains unchanged."

As Lining's main competitor, Anta vice president Zhang Tao also said recently that after breaking through the "7000 shop" gateway, the number of Anta's stores will continue to grow.