In the past year, sports brands were expected to thrive amid a wave of athletic eventsHowever, the reality has been rather soberingWhile major players in the apparel market anticipated significant profit margins, the sector experienced an overall downturn that left many scrambling to maintain their footingA recent announcement from Anta, one of China's leading sports brands, revealed its performance for 2024 – a testament to both the industry's challenges and the resilience of certain brands.

According to the announcement, Anta's main brand saw a retail sales increase of about 7% to 9% for the fiscal year compared to 2023. Meanwhile, its well-known subsidiary brand, FILA, reported a more modest growth rate of 4% to 6%. Despite these positive figures, the overall growth is relatively minimal, prompting some observers to reassess the dynamics of Anta's success as the competition in the market becomes increasingly fierce.

Notably, the standout success belonged to some of Anta’s lesser-known brands, which recorded a staggering 40% to 45% increase in retail sales over the year

This surge highlights an important trend; while Anta's flagship brands may have plateaued, the growing clout of smaller brands might serve as a lifeline for the company as it navigates through this challenging market.

Anta's long-standing dominance in the market has been attributed primarily to its two flagship brands, Anta and FILAFor instance, in the company’s half-year report for 2024, Anta's total revenue was reported at 33.735 billion yuan, with Anta contributing 16.077 billion yuan (about 47.7% of total revenue) and FILA accounting for 13.056 billion yuan (38.7%). Other brands under Anta collectively contributed 4.6 billion yuan, making up 13.6% – a ratio that demonstrates considerable potential for future growth.

As Anta contemplates its future, the focus is evidently shifting towards its smaller brands, which, although currently not significant in revenue contributions, are demonstrating promising growth trajectories

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This is a strategic pivot that suggests the necessity for diversification in an increasingly competitive marketAnta's acquisition of FILA positioned it as a substantial player in the industry and showcased its ability to effectively manage and grow new brands, instilling confidence in its future acquisitions aimed at igniting overall growth for the conglomerate.

Anta’s recent acquisitions have shown an impressive response, especially in capturing the middle-class marketBrands like Kolon Sport and Descente, both of which are overseen by the second generation of Ding family leadership, have embraced a lifestyle-focused approach to meet the desires of younger, affluent consumersRiding the wave of the Gorpcore trend – where outdoor fashion seamlessly integrates into urban environments – these brands are becoming increasingly popular among city-dwelling consumers.

In the first half of 2024, Descente (China) registered revenue exceeding 3 billion yuan, and insiders have hinted that with the peak sales season arriving later in the year, total revenue could soar close to 10 billion yuan

Their positioning in the market is quite intentional; Descente focuses primarily on skiing, and socially, it’s recognized alongside well-regarded brands like Salomon and On, appealing to a segment that favors quality and exclusivity.

Kolon, despite its later entry into the market, has also impressively grown by almost 50% in revenue over the first three quartersAs consumer tastes veer away from mass-marketed brands toward the quirky and unique, Kolon has created a niche that resonates with many buyersIn a culture increasingly wary of overly branded items, shoppers are turning to Kolon for its discreet yet stylish offeringsThe ethos ties closely with rising brands like Canada Goose and Miu Miu, where originality and freshness become paramount.

Interestingly, Kolon’s appeal also stems from the aesthetic qualities of its productsIn the realm of outdoor apparel, style is often at odds with functionality, yet Kolon has managed to strike a balance

Their three-in-one jackets are crafted to meet outdoor activity demands while adopting color schemes that are in vogue, reminiscent of the much-coveted muted Morandi palette.

Moreover, Kolon has embraced the growing trend of understated luxury, appealing particularly to middle-class womenTheir ambassador, actress Liu Shishi, embodies this style, characterized by elegance and poiseThis portrayal has attributed Kolon with a reputation akin to “the lululemon of the outdoor sector,” a brand synonymous with style and performance.

The scope of Anta’s influence extends even further with its controlling stake in Amer Sports, the parent company for brands such as Arc'teryx, Salomon, and WilsonNotably, Arc'teryx has faced its challenges in retaining its once-vibrant image within the outdoor community; nevertheless, it remains a favorite among affluent Chinese menAmer Sports reported a 17% revenue growth reaching 1.354 billion USD for the third quarter of its 2024 fiscal year, with the technical apparel segment, including Arc'teryx, rising a staggering 34% compared to the previous year.

With subsidiaries like Kolon, Descente, and Arc'teryx showing prolific promise, they are routing investments into becoming Anta’s next robust brands akin to FILA