【FOCUS】From Nike's 80% plummet, see ANTA's new injection into PUMA

【FOCUS】When FILA's explosive growth fades, Anta (02020) looks to PUMA as its next growth engine. On Friday (11th), it received unconditional approval from the State Administration for Market Regulation for its equity acquisition. Riding on the momentum of being the third-largest supplier of national team jerseys for the World Cup, along with a collaboration with Blackpink member Rosé, what insights can be drawn compared to Nike, which is about to be removed from the S&P 100?

\* Lost Trend, Nike's Retreat *

Thirty years of prosperity and thirty years of decline; whether it's a peak falling or a trough rising, perhaps five years is enough. Just on Thursday (10th), Nike's stock price hit a new low of $36.55, evaporating 80% from its historical high in October 2021. Coincidentally, in July, Nike notified its largest distributor in mainland China, Tmall (06110), that it would terminate its online sales cooperation starting next year, shifting to a model of brand flagship stores or official DTC on major e-commerce platforms. This attempt to rebuild consumer trust seems to overlook the fundamental reason for its struggles, which lies in the product.

Why? Look at the long queue outside the Onitsuka Tiger flagship store in Shinjuku, Tokyo, and the 36% year-on-year sales growth in the first half of the year, which clearly indicates that the popular trend points to a retro style that combines clean fit and relaxation. In contrast, Nike's traditional image remains stuck in the heavy and oversized American street style, making it difficult to equate with "trendy" in the eyes of the younger generation who are keen on jogging, mountain sports, and pickleball, all of which favor "lightweight outdoor" gear.

\* Ultimate Segmentation and Comprehensive Coverage *

In January, Anta announced a cash consideration of €1.5 billion to acquire a 29.06% stake in PUMA, which is best known for its classic racing jackets and Manchester City/AC Milan jerseys. In the recently concluded World Cup, it provided jerseys for 11 of the 48 participating teams, making it the third-largest supplier after Adidas and Nike. In August, PUMA launched racing shoes and ballet shoes in collaboration with Rosé, further amplifying its "Y2K" fashion gene to the extreme.

Given this, Anta's "multi-brand" strategy, even in the face of FILA's slowdown, will undoubtedly enhance the comprehensive coverage of its other brands, including Descente (high-end professional sports like skiing), Arc'teryx (high-end professional outdoor), Kolon Sport (light luxury mountain gear), MAIA Active (yoga sports), Jack Wolfskin (mid-to-high-end outdoor), and PUMA (trendy sports), all targeting extremely segmented scenarios.

\* Intense Competition, Weak Demand *

However, compared to the 2009 acquisition of 85% of Full Prospect (which owns the FILA trademark in China) and the 2019 leading acquisition of 94.98% of Amer Sports (which includes Arc'teryx), Anta's 29.06% stake in PUMA, even as a single major shareholder, may inevitably involve adjustments and compromises in future operational strategies. Additionally, despite PUMA having its share of blockbuster products, competition from brands like Onitsuka Tiger, ON, and HOKA in similar categories is also quite fierce PUMA's second-quarter performance further indicates that it is also facing weak consumer demand in regions such as Europe and North America.

In short, in the face of the increasingly diverse interests of the young middle class, the era of a single brand "catering to the masses" has officially ended. However, can ANTA leverage its multi-brand strategy to outperform? A somewhat harsh reality is that ANTA's stock price has evaporated by 60% compared to its peak in 2021