China's major sportswear brands are suffering from a decline in new orders during a transitional period, mainly due to intensified competition and a sagging market amid the economic slowdown, market analysts said Sunday.
Domestic sportswear producer Xtep International Holdings announced over the weekend that the advance orders it received for the second quarter of 2013 decreased by about 15 to 20 percent year-on-year.
"After a decade of expansion, the sportswear industry is suffering rising inventories, falling orders, and a shrinking number of stores," Zhang Qing, founder and CEO of Beijing Key Solution Sports Consulting Co, told the Global Times Sunday.
Many brands are in transition, trying to upgrade technologies and cut operational costs, and the difficult period is estimated to last for two to three years as the sportswear industry reshuffles, said Zhang.
Xstep was not the only Chinese sportswear company to suffer from declining orders. Its domestic competitor Anta Sports Products disclosed November 16 that it also received 15 to 25 percent fewer new orders for the second quarter of next year compared with a year earlier.
Peak Sport Products Co reported early this month a drop of 20 percent year-on-year in the new orders it received for the second quarter of 2013, while Hong Kong-listed Li Ning Co announced in its interim report that its revenues and profits attributable to shareholders plunged by 9.5 and 84.9 percent respectively for the first half of 2012 from a year earlier.
Li Ning decided in August to stop disclosing sales fair order figures, which may have been due to a bad order situation.
The Chinese sportswear industry experienced a 30 percent average annual growth over the past 10 years, during which time new brands mushroomed and many domestic brands expanded fast by increasing outlets.
Yet with intensified competition and changing consumer habits, many well-known brands are struggling. By the end of June, Li Ning had closed 952 outlets, and Anta Sports cut 110 outlets from the end of 2011.
Heightened competition came not only from home-based rivals but also from international brands such as Nike and adidas as well as other fashion brands, including Zara, H&M, and Uniqlo, which have extended product lines into the sportswear territory, Zhang said.
Younger-generation consumers prefer the cheaper prices of online shopping to brick-and-mortar stores, which has led to shrinking sales in outlets and falling profits for sportswear brands, Zhang noted.
Consumers tend to spend less on apparel in a sagging economy, Wang Zhuo, secretary-general of the China National Garment Association, told the Global Times Sunday.
The textile and apparel industry's business climate index was 96.6 in the third quarter of the year, down by 0.6 percentage points from the second quarter and falling for the fifth consecutive quarter, according to ce.cn, a business information portal.
Despite the underperformance of major Chinese sportswear brands, Zhang predicts that the overall market will grow once the economy starts improving, because consumers are paying more attention to health issues and tend to exercise more.