Raw material prices: In the first half of the domestic sports apparel prices

Recently, listed companies such as Li Ning, Anta, Peak, Xtep and other domestic sporting goods have announced their financial results for the first half of 2010. In addition to different degrees of growth in performance, another point has received widespread media attention—the retail price has generally risen. Among them, the average selling price of Xtep (01368.HK) footwear products increased by 6.6%, and the average selling price of apparel products increased by 13.9%. The average selling price of Anta's footwear products increased by 2.0%, while that of apparel products increased by 7.1%. The average retail price of Li Ning footwear products increased by 7.8%, and the retail price of apparel products increased by 17.9%. According to statistics from Analysys International, the consultancy, the sports events in the first half of the year have continued to increase marketing expenses, which is also the reason for the general price increase in the second half of the year.

Average increase 2% - 17.9%

As early as June of this year, Li Ning, a domestic sports brand, announced that the average retail price of footwear products will increase by 7.8% in the fourth quarter of this year and the retail price of apparel products will increase by 17.9%. Li Ning's explanation for this is that the price increase is mainly to increase the brand's positioning and to narrow the distance between the brands of multinational sports.

If Li Ning, whose domestic sales once surpassed Adidas's leap to second place, is concerned, brand support is enough to bear the influence of price increase on consumer psychology. Therefore, brands such as Anta, which are still dominated by second- and third-tier cities, apparently have not yet had such a "green air". However, several mid-year reports show that they also have plans to raise prices.

Xtep announced that semi-annual report, the average selling price of footwear products will increase to 85.7 yuan***, an increase of 6.6% year-on-year, the average price of apparel products increased to 52.2 yuan***, an increase of 13.9%. Anta Financial reported that in the first half of this year, the average selling price of Anta footwear products rose by 2% to 96.9 yuan***, and that of apparel products increased by 7.1% to ***49.6 yuan***. Peak (01968.HK) reported that the average unit price of the Group’s apparel products increased 2.1% from RMB 42.5 in the first half of 2009 to RMB 43.4 in the same period of 2010.

In the case of the listed four major sporting goods listed companies, the price increase rate of their products has significantly exceeded that of the domestic CPI (consumer price index) by 2.6% in the first half of the year.

The increase in raw material prices is mainly due to the “impatient” price increase. In the first half of the year, the rising raw materials, labor, and marketing costs are the main pressures. After the significant increase in product prices, there was no significant increase in gross profit margin. For example, Anta's gross profit margin increased by 2.2 percentage points to 43.7%, far lower than the price increase rate. Peak's average price increase was the lowest among the four listed companies, but its gross profit margin in the first half of the year fell by 0.4 percentage point to 37.7%. The maximum price of special steps for price adjustment was 40.7%, which was a mere increase of 1.8% compared with 38.9% last year.

"Right now, the raw material prices have risen sharply, directly leading to rising clothing costs. We will bear the brunt of the impact." A factory manager for domestic and foreign sports brand OEMs in Jinjiang told reporters that downstream clothing brands also understand this point. The demand is large, but it can not keep up with the increase in raw materials, so it can only be passed on to consumers.

The China Cotton Price Index shows that the standard cotton price has risen from the average price of 12,831 yuan/ton in 2009 to 18,165 yuan/ton in July this year and 41.5% in half a year. This is not just a matter of domestic raw materials. Statistics from the customs also show that since October last year, the prices of textile raw materials such as cotton and chemical fiber have also increased in varying degrees.

In addition, rising labor costs are also one of the reasons. According to the report, the group’s salary, salary, and other welfare expenses rose from RMB 675 million last year to RMB 1,017 million. The main reason is not the increase in personnel, but the increase in average salary.

The game of price increase and brand support "The price increase is based on sufficient brand support. Only sufficient brand influence will increase the price will not cause consumers to resent." Liao Chih-kwan, an apparel industry analyst, said that this year's sports event has continued For domestic sports brands, it is a rare brand improvement opportunity, so the "cost" will be larger.

According to the statistics of the Enfodesk Think Tank Research in April, the scale of online advertising in the clothing and apparel industry of the month dropped slightly by 12.3% month-on-month, of which the proportion of sports and apparel manufacturers in apparel apparel online advertising was substantially lower than the same period of last year, while the budget was much higher. Concentrating on events such as the World Cup and the Asian Games, the advertising apparel network advertisement in April has shown a downward trend contrary to previous years.

This means that sporting goods companies are facing the pressure of rising costs of raw materials and labor, and they must “send up” to shareholders, maintain profit margins and gross profit margins, and place limited marketing resources on major sports events.