“Although the consumer market faces challenges, we remain confident about the future. The board has approved a share repurchase plan. Over the next 18 months, we’ll allocate up to HKD 10 billion (USD 1.3 billion) to buy back shares, boosting shareholder returns and creating long-term value.”
This was the statement from Ding Shizhong, chairman of Anta Sports, during the company’s earnings call on August 27. It’s the first time since 2007 that Anta has rolled out an equity repurchase plan, and it has provided a big confidence boost for the capital markets. The following day, Anta’s shares surged by nearly 12% on the Hong Kong Stock Exchange.
From a performance perspective, Anta had a roaring first half of 2024. The company recorded revenue of RMB 33.74 billion (USD 4.7 billion), reflecting a 13.8% year-on-year (YoY) increase.
Breaking it down, Anta’s main brand saw a 13.5% revenue increase to RMB 16.077 billion (USD 2.3 billion), with a 0.8 percentage point jump in gross margin to 56.6%. Fila, a core brand, posted RMB 13.056 billion (USD 1.8 billion) in revenue, while its gross margin rose by 1 percentage point to 70.2%.
But it’s not just about Anta and Fila. The group’s other brands are making waves. In the first half of the year, Descente and Kolon, under a separate division, grew by 41.8%, surpassing expectations.
With the growth of these brands, Anta’s overall gross margin rose by 0.8 percentage points YoY to 64.1%.
“Descente can hit RMB 10 billion”
Anta’s multi-brand strategy is a powerful shield against the challenges of a sluggish macroeconomic environment, helping the company mitigate risks and generate solid revenue growth.
Ding underscored this by pointing out that, in the three-piece outfit set typically donned by the middle class consumer, two of the three pieces come from Anta and its subsidiary Amer Sports—Arc’teryx and Salomon. “This year, the two top-performing brands in terms of store efficiency are also from Anta and Amer Sports. The first is Arc’teryx, and the second is Descente.”
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Anta’s growth strategy, summed up in its focus on one core business, multiple brands, and globalization, has long been central to its expansion.
In 2007, Anta went public in Hong Kong, raising over HKD 3.5 billion (USD 450 million)—setting a record for the largest capital raise by a domestic sportswear brand at the time. Two years later, the company took over the exclusive rights to operate Fila in the Greater China region from Belle for RMB 460 million (USD 64.7 million). Back then, Fila had only 50 stores in China and was losing over RMB 32 million (USD 4.5 million) annually.
Fast forward a decade, and Anta has transformed Fila into a major player, positioning it in high-end shopping malls across China’s first- and second-tier cities. By 2019, Fila had outperformed Anta’s core brand in operating profit, and by the first half of 2020, Fila’s revenue had overtaken Anta’s.
Fila’s revival positioned Anta for a bigger move on the global stage. In 2019, the company led a consortium to acquire Amer Sports for EUR 4.6 billion (USD 5.1 billion).
Amer Sports made its debut on the New York Stock Exchange (NYSE) in February 2023 with a market capitalization of USD 6.3 billion. Amer’s financials are looking healthier, too—the company posted a net profit of USD 5.1 million in the first half of 2023, returning to profitability. The release of these results caused Amer’s stock to soar by more than 10% in a single day.
“We’re not trying to be the Nike of China—we’re building Anta into a global brand.” This is how Ding describes the company’s bold ambitions, achieved through its multi-brand strategy.
What’s driving growth?
The recovery of the sports footwear and apparel market is following a K-shaped path, with the high-end and mass markets developing in parallel. There’s a growing trend toward consumer segmentation, specialized scenarios, functionality, and personal expression. Anta’s diverse range of brands, catering to all tiers of consumers, is designed to weather these market shifts and cushion the impact of economic slowdowns.
Right now, Descente is seen as the company’s next big growth engine. The brand has gained serious traction in the skiing world.
In 2016, Anta formed a joint venture with Descente and Itochu Corporation, securing exclusive rights to operate the brand in mainland China. On the earnings call, Ding explained how, when they first started with Descente, he believed it could hit RMB 2 billion (USD 281 million) in revenue within five years. “Given its current scale, it won’t be long before Descente hits RMB 10 billion (USD 1.4 billion).”
Descente is performing well. Its operating profit margin is over 30%, and in the first half of this year, it opened 10 new stores, bringing the total to 197. Seven of those are children’s stores, each averaging RMB 550,000 (USD 77,275) in sales.
Ding envisions Descente becoming Anta’s third brand to break the RMB 10 billion mark, suggesting that Descente could be strategically positioning itself to follow in Fila’s footsteps.
Quest for future growth in sports
Despite its focus on newer brands, Anta and Fila remain the group’s cornerstones, contributing nearly half of total revenue.
Fila faced some challenges in 2022. Its revenue dropped by 1.4% YoY, while gross profit and operating profit declined by 7.2% and 19.4%, respectively. This decline was largely attributed to the pandemic’s impact on offline business.
Since then, Fila has entered a period of adjustment. Its focus is shifting to elite sportswear after stabilizing its operations. In 2023, Fila’s revenue returned to growth, and in the first half of this year, it resumed store expansion, adding nine new locations. But despite this, its growth still lags behind its annual target of 10–15%.
Lai Shixian, co-CEO of Anta, candidly admitted that achieving this year’s growth target “won’t be easy.” However, he remained optimistic, noting that “we’re in good health, and the team should aim high. Double-digit full-year growth is still within reach.”
Navigating economic cycles is part of the game for the sportswear industry in China.
Anta’s other co-CEO, Wu Yonghua, echoed similar sentiments, explaining that the group has adjusted Fila’s growth strategy for its trendy products. He also revealed that Anta underwent a reform in July that “has shown great results.”
Industry insiders told 36Kr that Anta is increasingly shifting its focus toward the outdoor sportswear market, while still maintaining its commitment to professional sports.
In China, Fila has launched a concept that translates to the “emotional outdoor,” using major e-commerce platforms to release products that blend professionalism with style, catering to high-end consumers. Meanwhile, Anta has turned its main flagship stores into premium locations specializing in outdoor products.
Veteran retail expert Wang Guoping told 36Kr that Anta’s countercyclical growth has been bolstered by its ability to tap into the growing outdoor sportswear market in China.
He pointed out that, in a generally weak market, the outdoor, women’s, and children’s segments remain key growth areas for the sportswear industry. Outdoor gear, in particular, is undergoing a shift toward “light outdoor” items—less focused on performance, and more on fashion and lifestyle.
“This shift is changing the way consumers think about sportswear. For years, no brand truly dominated China’s outdoor market. Companies like Sanfo Outdoor, Toread, and Camel never managed to gain significant market share.”
Wang believes Anta’s decision to acquire several outdoor brands was a smart one. At the same time, the entire sportswear industry still has room to grow online. Reason being, In the early stages, brands tend to hold a relatively small share of online sales.
In the first half of this year, China’s retail sales of consumer goods increased by 3.7% YoY, while online sales of physical goods rose by 8.8%, accounting for 25.3% of total retail sales. New e-commerce models, such as live and quick commerce, have played a significant role in driving this growth.
Anta’s financial report shows that the company is aggressively expanding its presence in emerging e-commerce channels, with e-commerce contributing 33.8% of its total revenue across all brands. In absolute terms, this represents a 25.1% increase from 2023.
Since 2020, Anta has also embraced a D2C model. As of June 30 this year, more than 10,000 of Anta’s over 12,000 stores were operating under the D2C model, with over 6,000 directly operated by the brand—now accounting for over half of the group’s total store count.
However, Anta’s multi-brand strategy presents challenges when it comes to managing inventory.
According to the financial report, Anta’s inventory turnover stands at 114 days, down 10 days from 2023, but still higher than other Chinese sportswear brands that focus on a single brand.
As for cash flow, Anta recorded a net operating cash inflow of RMB 8.502 billion (USD 1.2 billion) in the first half of 2024, with free cash flow reaching RMB 7.619 billion (USD 1.1 billion). By the end of the reporting period, Anta had RMB 47.83 billion (USD 6.7 billion) in cash and equivalents, including long-term bank deposits and pledged deposits.
Notably, Anta’s strategy seems to align with Li-Ning’s when it comes to growth. During the earnings call, Ding stressed that, in a volatile external environment, Anta would stick to a “steady, sustainable growth strategy.”
Meanwhile, Anta’s core market—lower-tier cities—is facing increasing pressure as international brands like Nike and Adidas expand their reach. Sources at 36Kr said Li-Ning is also intensifying efforts to capture market share in lower- and mid-tier cities.
What’s clear is that, in China’s fiercely competitive sportswear market, the game is far from over. For Anta and its competitors, this is just halftime.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xie Yunzi for 36Kr.