Sports Brand Share Price Dives, But The Crisis Of Survival Is Still Behind.

With the spread of the new crown virus, the retail market across the country has been hit hard. Meanwhile, the capital market has also responded. In sports industry, sports equipment companies, which are part of the retail industry, have also suffered heavy losses in this downward trend.

In the last two weeks of January 2020, share prices of major domestic sports brands such as Anta, Lining and XTEP plunged, and the total market value evaporated over 30 billion yuan. Of them, the market value of Anta was over 20 billion yuan.

From January 20, 2020 to January 31st, the movements of stock prices of major domestic sports brand listed companies are as follows:

Anta: HK $76.6 - HK $>69.05, or about 10%;

Lining: HK $27.1 - HK $>23.35, or about 14%.

XTEP: HK $4.32 - HK $>3.43, or about 21%;

361 degrees: HK $1.44 - HK $>1.21, or about 16%.

China's trend: HK $0.91 - HK $>0.8, a decrease of about 12%;

Pathfinder: 4.75 yuan - >3.85 yuan, or about 19%;

In fact, the real crisis behind the decline in stock prices is that if the epidemic can not be quickly controlled and the offline market will continue to freeze, the sports equipment industry will also face serious survival crises as well as catering, film and other industries.

As a main battleground against the epidemic, a nationwide anti - epidemic campaign is being carried out in China. Wuhan "closed city" and "Hubei province", the state called on the whole nation to stay away from the public during the epidemic period. Most of the public places such as food, entertainment, shopping and so on were forced to close, and the Spring Festival holidays of all enterprises had to be extended later.

These anti epidemic measures have a huge impact on the physical retail enterprises which rely on selling goods. On the consumer side, people dare not go out, shopping centres can not operate or shorten business hours, sports venues are closed, consumers' demand for sports equipment has lost thrust and no pull; at the end of production, due to the delay in resuming production, the delivery of orders in China may be delayed, and orders for international markets are also dragged down.

According to the analysis and policy recommendations on the impact of the epidemic on China's economy released by the Hengda Research Institute in January 31st, the epidemic has the biggest impact on catering, tourism, film, transportation, education and training industries. In the two industries such as catering and tourism, the losses in the 7 days of the Spring Festival amount to 1 trillion.

Jia Guolong, the boss of northwestern oat village, a restaurant giant, is outspoken: "the biggest pressure is still on raising people. The monthly salary is 150 million, and the cash flow on the account is only 3 months away."

In fact, not only is the catering industry, but for most of the domestic sports brands relying on offline retail, the delayed holidays, the closed shopping malls and empty streets are just like nightmares. Without sales, there will be no cash flow. At the same time, the wages of employees must be paid as usual, and the heavy cost of store rentals should also be borne.

Take Lining and Anta's two major domestic sports brands as an example.

According to the financial report released by Lining in the mid 2019 (January to June), the total number of stores in the country of Lining is 7294, of which 2251 are Li Ning Co's direct operating costs and the rest are dealer shops. In the first half of 2019, Li Ningguang paid RMB 319 million yuan on shop rents, which averaged 53 million yuan per month. In the same period, there were 3495 employees in Li Ning Co, and the wage cost was 725 million yuan, with a monthly average of 120 million yuan. According to the data of the first half of 2019, Lining spent about 200 million yuan on monthly rent and staff wages.

Anta group's 6 major brands (Anta, FILA, DESCENTE, KOLON SPORT, KINGKOW and SPRANDI) had 12479 stores in the first half of 2019. The cost of staff salaries in the half year is RMB 1 billion 850 million yuan, and the monthly average cost is 310 million. In 2019, the total annual rental cost was more than 1 billion yuan, with a monthly average of 167 million. Therefore, Anta spent at least 400 million yuan a month on store rentals and staff salaries.

Besides, the sales revenue of the electricity supplier channel generally accounts for only 10%-30% of the total revenue of most sports brands. Although some consumers' buying behavior has to move from offline to offline, the gain to online sales may be offset by the decrease in consumption desire. After all, when everyone can only "squatting at home", the desire to buy new clothes and new shoes will be relatively low.

So whether it is the top two sports brands such as Anta and Lining, or other weaker sports brands, the pressure of "making ends meet" is enormous. In particular, those with low cash turnover and less cash will face a crisis of capital chain breakage.

Because the Chinese market is so important, even the international sports giant brand such as Nike and Adidas shares were affected by the global spread after the end of 1.

The United States Centers for Disease Control and prevention announced the discovery of the first case of new coronavirus pneumonia in the United States on January 21st. The US stock market opened the following day, and Nike, Cage and other Chinese sports brands, which rely heavily on the Chinese market, fell. In January 25th, after the first confirmed case of new crown pneumonia in Europe, Adidas shares also fell.

According to lazy bear sports statistics, in the last two weeks of January, Nike's share price dropped by about 7.9%, while Adidas's share price dropped by about 8.3%, and Cage dropped by about 9.3%. And Lululemon, Andemar and other brand shares were less affected by the epidemic, with a drop of around 1%.

It can be seen that even the international sports brands that are not China's main selling markets have been hit hard. Most of the domestic brands that are rooted in the Chinese market are even more unbearable. At present, a lot of domestic brands have launched a self promotion campaign in the electricity supplier channel, and the discount period is basically consistent with the Spring Festival holidays extended throughout the country, ranging from February 1st to February 10th.

If the epidemic continues to spread, not only will the confidence of the capital market decline, but some domestic sports brands may even face a crisis of life and death.