Goldman Sachs lowered Li Ning's profit forecast, Zara's sister brand closed a large number of stores in China, and luxury goods really rose丨Brand Daily

The performance fell behind, and Goldman Sachs lowered Li Ning's profit forecast

Li Ning is gradually being left behind by Anta.

Goldman Sachs recently lowered its profit forecast for 2023 to 2026 by 11% to 15% in its latest research report, based on its slowing sales growth, higher operating expenses and lower non-operating profits.

In the past few years, in order to move towards high-end, Li Ning has invested heavily in brand building - positioning the national trend, frequently brushing its face in fashion week, or creating new high-end sub-brands, but with little success.

In addition, Li Ning was overly optimistic in predicting the consumer demand after the epidemic, and after opening hundreds of stores on a large scale, the operating costs rose sharply while sales continued to be sluggish, and then it could only be saved through discount promotions, but it also affected the profitability performance. The performance was poor, and it continued to suffer setbacks in the capital market. Its share price has fallen from a high of HK$106 in 2021 to less than HK$20 today, which has shrunk several times.

On the contrary, its old rival Anta has achieved both revenue and profit growth through strategies such as acquiring brands and building a multi-brand matrix operation in recent years. Brands such as Arc'teryx, Salomon and FILA are all in the limelight, but before they were acquired by Anta, their performance was somewhat unsatisfactory. Now the news of the listing of Amalfen Group may become a catalyst for Anta's stock price.

In the Chinese sports market, in addition to Anta, which is running fast, Li Ning also has endless opponents. The strong competitive pressure of multinational old brands such as Nike and Adidas, and emerging sports brands such as lululemon and Angpao are also rapidly encroaching on Li Ning's market share, and in the domestic camp, Anta and Xtep are also continuing to grow.

Now, Li Ning is readjusting its development strategy, such as following the example of its old rival Anta and laying out some sports segments through acquisitions. Recently, Li Ning indirectly bought the Swedish outdoor brand Haglöfs in the hands of Asics, which achieved an 11% increase in sales and a 25% increase in profits last year.

After Zara fell behind in China, the "good sister" OYSHO also shrank in China

Not only Zara, but also OYSHO, another clothing brand owned by its parent company Inditex Group, is not having a good time in China.

Initially, OYSHO was positioned as a women's lingerie brand, but a few years after its establishment, it joined the sports line and successfully transformed into an athleisure brand with a focus on basics, and since then it has embarked on a completely differentiated route from Zara, which focuses on fashionable womenswear.

In the golden development period of fast fashion, when it first entered Chinese mainland, backed by the fame of the main brand Zara, OYSHO opened in the core business districts and residential gathering areas of large and medium-sized cities, and won nearly 100 square meters of store area. In many shopping malls in Shanghai and Beijing, Inditex Group's sub-brands such as OYSHO, Zara Home, and Massimo Dutti are still opening stores around the ZARA matrix.

From the pricing point of view, OYSHO is higher than Zara, most of the commodity prices are above 399 yuan, and the price of some categories of products reaches about 1500 yuan, which is obviously mainly aimed at the middle class. However, with the end of consumption upgrading and the advent of the era of parity, OYSHO's core user base in China has begun to sink, and based on this, the brand is currently closing a large number of stores in China.

Offline has shrunk, but OYSHO's online channel reform in China today is not significant. In fact, with limited budget and energy, its parent company, Inditex Group, has focused on Zara for its digital transformation in China, and has recently innovated on Douyin Live, which has attracted a lot of attention. And OYSHO, which is average in size, has become the overlooked party.

In the absence of group support, OYSHO is now facing more fierce competition, and the same sports and leisure category of Bananai, Jiaoxia, and the recently acquired Maia active by Anta are all trying to break the game, and OYSHO is the least obvious one today.

Prices can no longer be stimulated by pricing, and luxury goods may stop rising in price

The endless wave of price increases in the luxury industry may be coming to an end.

HSBC and Royal Bank of Canada have said that with the gradual normalization of the growth of the luxury industry, the price increase of luxury goods may slow down, except for a few brands, the fourth quarter performance of major luxury brands will also be weak.

Luxury brands will be constrained by the fact that they are now being overpriced in the face of persistently sluggish consumer demand, and the profitability of luxury brands will be limited by smaller contributions from higher price increases and downside risk to profit margins, which will directly lead to their setbacks in the capital market.

According to Fashion Business, the share prices of the world's major luxury groups all fell on the first trading day of this year, of which LVMH shares fell for two consecutive days, with a cumulative decline of 6%, and the latest market value was 350.4 billion euros, less than the same period last year.

Luxury brands often attribute price increases to rising raw material costs, the impact of inflation, etc., but for luxury goods with gross margins much higher than those of general consumer goods, the pricing of the product is not based on its cost. Relying on price increases to drive performance is the main reason. Rising barriers to purchase screen out high-net-worth individuals – the wealthy and middle class – who are happy to see brands increase prices to maintain scarcity and are more willing to pay for it as a consumer investment.

The wealthy can still afford it, and for most of today's thrifty middle class, prices that are significantly beyond the affordable range will only make them realize more quickly that they are not the core users of luxury goods.

what's more

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Peacebird released a profit forecast, and net profit will soar by 125% in 2023

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