"The 1 Generation Of Blitz," Lining's Shoes Burst On The Spot, But The Problem Is More Than That.

"Looking for a mirror" often has unexpected effects, such as this "1 generation" Lining sneakers.

In February 13th, when the 81 men's basketball team and the Shenzhen men's basketball team went on to the fourth quarter, because of the sudden burst of shoes, Ramon slipped to the ground in defense, and the audience was extremely "not guilty" and burst into laughter.

And this "1 generation" Lining sneakers have become the focus of the market, and the masses have discussed their quality problems.

It is noteworthy that in the arena, not only Lining's shoes had explode, but also Nike, Ginobili, AJ and other brand shoes had happened.

But compared with the cracking of shoes, Lining is facing bigger problems, which is related to how far and how big the company can go.

After several years of "de Stocking", sporting goods companies finally came to their knees. Lining also stepped out of the mire of losses. Since 2015, the stock market has been losing profits.

In 2018, when the market plummeted, Lining recorded an annual gain of 32.7%, and has risen 25.24% since 2019.

But behind Lining's recovery, it is "back to light", which can be seen from the comparison with competitors.

In 2015, although Lining turned into a deficit, he still had a far cry from his competitors in terms of inventory turnover.

Lining's stock turnover rate was only 3.47 times at that time, while Anta sports (02020) was 6.31 times, XTEP International (01368) was 6.32 times, and even 360 degrees (01361) also had 4.7 times.

In the face of low inventory turnover, Lining began to make strategic adjustments to the sales channels. After a series of reforms, inventory turnover increased steadily, and increased to 4.54 times in 2017. In the first half of 2018, inventory turnover increased again, second only to Anta.

With steady growth in inventory turnover, gross margins rose from 45.03% in 2015 to 48.67% in the first half of 2018.

But with Anta, the gap has come out.

In 2015, the margin difference between the two sides was only 1.58 percentage points.

But with the expansion of Anta's scale, the scale response has been gradually reflected. The margin of gross margin between Lining and Anta has increased. The gap widened to 5.59 percentage points in the first half of 2018, but the gross margin of Lining is still higher than that of XTEP and 361.

However, the advantage of high margin is not reflected in profits.

In 2015, Lining's net profit margin was 0.2%, rising to 8.01% in 2016. In the first half of 2018, the net profit rates of Anta, XTEP and 361 were 18.54%, 13.68% and 11.26%, respectively, which were much higher than those of Lining.

When the industry is getting warmer, why does Lining's net profit margin not look good?

The main reason is that sales and distribution expenses are too large.

Take the first half of 2018 as an example, Lining's sales and distribution expenses accounted for 36.8% of the revenue, while Anta was only 26.2%, and the difference between the two sides was 10 points.

Detailed statistics on sales and distribution expenses of the two companies were obtained. According to APP, the difference between rents and related expenses was the largest. In 2017, the rent and related expenses of Anta were 894 million yuan, the ratio of total income was 5.4%, the rental and related expenses of Lining were 830 million yuan, the total income ratio was 9.4%, which was 4 percentage points higher than Anta's.

From the amount of money, the rent and related expenses of Anta and Lining are very small, but the difference is very large.

In 2017, Lining had 6262 sales points, while Anta had 9467 stores in China.

Similar rent, the number of sales points exceeded 3200, from the side, with the sinking of Anta market and the gradual consolidation of advantages, Lining has shifted the main market to a second tier city with higher rents.

But taking a second tier city as the main market means that products need to be high-end.

Zhitong finance and economics APP understands that the highest price of the Wade road series sneakers in recent years has reached 1009 yuan.

However, in the process of developing high-end products gradually, the pressure of Lining pformation is not small. Nike and Adidas are still the two mountain peaks of domestic high-end shoes.

Nike's revenue in the Greater China region in 2018 exceeded $5 billion for the first time, and the two digit income growth in sixteen quarters has been a great momentum.

Adidas's performance is also good. At present, the number of stores in China has reached 1, and it is estimated that there will be more than 700 new stores in China in the next three years.

As a big consumer country, China has become an important market for Nike and Adidas.

In addition to Nike and Adidas, Lining also has to compete with high-end products such as CONVERSE, NEWBALANCE, Cage and so on. Under such circumstances, it is not too hard to describe Lining with a long way to go.

But in terms of long-term development, Lining's response to severe competition is disappointing.

From the middle of 2015-2018 years, Lining's R & D expenditure has been the lowest among the four largest sporting goods companies in China.

Take the first half of 2018 as an example, Lining's R & D expenditure is 61 million 632 thousand yuan, which accounts for only 1.3% of the current revenue, while Anta's R & D expenditure is as high as 300 million yuan, even the ratio of R & D expenditure of XTEP and 361 is higher than that of Lining.

If we want to take the high-end approach, it is necessary to invest in R & D expenditure. But now Lining is in a dilemma. From the comparison with Anta's sales and distribution expenses, we can find that rent is the easiest way to squeeze out money for research and development. But if you really want to get money from it, it means reducing the existing stores and letting the existing market go hand in hand. But Lining is obviously not willing to take this risk. Therefore, R & D expenditure has never been raised.

In the end of life and death, few enterprises management can make such a choice, and Lining is now living in a short term of "heavy marketing".

In February 2018, Lining and his new products went to New York to participate in the fashion week. The company's share prices continued to rise. After the "wave show", Lining's performance in the first half of 2018 was more brilliant, with an increase of 17.9% over the same period last year, and net profit increased by 42% over the same period last year.

But "warm water boiled frog", if Lining does not make a fundamental change, it will be difficult to lift the banner of high-end domestic shoes. Although Lining is gradually slowing down, this is the result of the industry's "de Stocking". Lining is facing a serious problem today, not less than three or four years ago, but Lining can never really get out of the mire.

The flowers in the mirror, the moon in the water may be a dream after all.

Author: Yang Shihong