China’s home-grown sportswear industry is finally showing signs of recovery after nearly two years of massive oversupply, and industry watchers are betting that ANTA Sports Products will be first out of the blocks.
ANTA, the country’s largest sportswear company by market capitalisation, cheered investors on Tuesday when it said the value of its order book grew for the first time in six quarters and its earnings beat expectations.
“The dawn is coming. We expect to see a turnaround story next year, while more clues will be seen in the second half,” said Elyse Wang, retail analyst at Haitong Research based in China’s southern boomtown of Shenzhen.
China’s six largest sportswear companies went on an expansion spree after Beijing hosted the 2008 Olympic Games, counting on the event to spark fresh interest in sports and sportswear. They opened a combined total of about 12,300 stores in China between 2008 and 2011 - an average of 11 per day.
Demand failed to live up to those lofty expectations, and they were forced to shut about 4,700 outlets last year, averaging nearly 13 closures a day. Foreign rivals such as Nike and Adidas were also caught in the downdraft, posting disappointing sales and closing stores.
The combined inventory for China’s big domestic players peaked at 4.3 billion yuan (HK$5.4 billion) at the end of 2011, triple the 1.5 billion yuan in stockpiles at the end of 2008, according to Thomson Reuters data. They purged stockpiles last year, whittling that figure down to 3.8 billion yuan.