Sportswear Companies Shows Profit Returns after Suffering Years in Recession
International and domestic sportswear companies finally turned the corner after suffering from recession for years. Sportswear majors showed a strong growth in the Chinese market in 2015 which boosted the city’s residence pursuit of a healthy lifestyle. Based on Euromonitor International, Chinese sportswear industry is valued at 150 billion yuan. Adidas Group China unit have reached their sales target of 2 billion euros for 2015 and successfully completed a five year business strategy makeover that started in 2010.
For the first nine months the company’s gross profit increased almost 40 percent year on year to .05 billion euros. Adidas group managing director Colin Currie said that the record achievement in the company’s ability to execute decisive strategy. Due to rising disposable incomes which is increasing consumer spending also help in expanding the sporting goods industry in 2015 a trend that is particularly popular in smaller cities in China. Adidas expanded its retail presence to 8.500 stores in both large and small cities and launched retail stores in new segments for women, basketball and sportswear collections.
For the next five years, Adidas will continue to focus in five main drivers such as football, women, kids, running and Originals, this part of the brand strategy will strengthen key categories and lead mind share. The plan will cash in on the continued growth by meeting demand of the increasing middle class in China that are placing a higher emphasis on the quality of life experiences and the nation’s need with an ignited interest in sports. Nike Inc. Adidas nearest rival and Global market leader also shrugged off the sluggish growth trend. Earlier this month, Chinese sportswear maker Li Ning Co. Ltd is expecting to break even in 2015 after years of losses. The company expected it stocks to buoy and would have pleased investors which includes private equity firm TPG Capital Management and Singapore’s Sovereign wealth fund GIC Private Ltd.
Its board believe that the turnaround in operation results in due to an increase in both sales revenue and gross profit of the group and a decrease in expense ratio fo 2015. Li Ning attributed their improved performance to efficient operations at its directly owned stores that turned profitable, better relationship with its partners and expanding its e-commerce brand.
Sportswear firms used to focus on style and casual, now that are turning its attention to function specific products which requires investments in research and development and professional knowledge. Domestic brands must invest more on professional races and marketing strategy, also local sportswear brands were timid in communicating with younger generations that swear on the no baggage no fear principle. Furthermore domestic brands must be more expressive in motivating consumers. The government is planning for the sportswear industry to continue their grow to an estimated value of 5 trillion yuan by 2025.