China Business Daily (Reporter Zhou Ziyi, Wang Yifei) Recently, the news that Amer Sports, the parent company of Arc'teryx, went public in the United States has attracted much attention. On January 5, Anta announced that Amalfen, a non-wholly-owned subsidiary of its joint venture, had submitted an application for listing in the United States.
It is understood that the goal of Amalfen's IPO is to raise $1 billion, and its valuation can be as high as $10 billion after listing. What is the market situation of Amalfen's brands, and what is the significance of its listing in the United States for ANTA?
Announcement of the submission of an overseas listing application by ANTA Joint Venture.
Its brands occupy two seats in the "Three Treasures of the Middle Class", and Amalfen has the highest revenue in China
"Three treasures of the contemporary middle class, Lulu Salomon Archaeopteryx. In recent years, a ridiculous buzzword has become popular on major social platforms. Lululemon is widely known as the "Hermes of yoga pants", while SALOMON and ARCTERYX are slightly unknown to the general public.
As the two pillar brands of Amalfen, Salomon and Arc'teryx occupy the "two seats" in the high-end market of outdoor sports in China. The two are not only must-have brands in the outdoor circle, but their products have also become trendy items outside the circle.
"Wearing an Archaeopteryx jacket and Lululemon's yoga pants, a Ralph Lauren baseball cap, an Apple watch on his hand, and Salomon shoes on his feet, he rode to Wagas for a light meal. I don't know when, this kind of fashion became popular, and was jokingly called "middle-class standard" by the majority of consumers.
The "high-end" attributes of outdoor brands such as Arc'teryx and Salomon not only stem from their high prices, which symbolize the status of the middle class, but also are inseparable from the growth of domestic sports consumption and the transformation of public life concepts. Clothing analyst Yang Dajun told China Business Daily that after the epidemic, domestic consumer groups pay more attention to physical health and quality of life than before. One consumer commented: "Wearing Arc'teryx not only represents 'wealth', but also 'leisure' to do outdoor sports. ”
Salomon and Archaeopteryx are widely popular because they conform to the trend of consumption upgrading of outdoor sports in China, but their response in the European and American markets has been mediocre. The Chinese market has become the main attack position of Amalfen. According to the prospectus, Amalfen's revenue in Greater China in 2022 will be US$523.8 million, and the operating profit margin in China exceeds the overall business profit margin. At the same time, since 2023, Amalfen's revenue in Greater China has grown rapidly, with a year-on-year increase of 67.6% in the first three quarters.
Amalfen was acquired by Anta and other companies in 2018, and according to the announcement, a consortium of investors composed of Anta, FountainSilta, Anamered Investments and Tencent spent 4.6 billion euros to acquire Amalfen. At that time, Anta executives said that after Amalfen was acquired by Anta, the biggest synergy was still in China. According to the prospectus, from 2020 to 2022, the compound annual growth rate of Amalfen's revenue will be 20.4%, and the gross profit margin will expand from 47% to 49.7% in the same period, confirming the benefits of the acquisition.
After entering the Chinese market, Amalfen's brands have received a mediocre response, and after being acquired by Anta, Arc'teryx and Salomon quickly "broke the circle". In the first three quarters of 2023, Arc'teryx's revenue in China reached US$453 million, accounting for nearly 80% of the total revenue in Greater China.
Yang Dajun told a reporter from China Business Daily that Arc'teryx can develop rapidly in the domestic market thanks to Anta's channel advantages and operational experience. The success of Fila has enabled Anta to accumulate more methods, which enables Anta to fully support the promotion of the brand influence of Amalfen.
ANTA stepped onto the international stage, and Amalfen became a springboard
It is understood that Amalfen has applied for the listing of its common shares on the New York Stock Exchange, with Goldman Sachs LLC, Bank of America Securities, JPMorgan Chase and Morgan Stanley as joint underwriters, with a wide range of influence.
Amalfen's brand matrix.
"Amalfen's listing in the United States" is regarded by industry insiders as a round of gambling on Anta's assets, and if Amalfen can really reach a value of 10 billion US dollars, Anta will get twice the price than when it was acquired.
But judging from the current financial situation, it remains to be seen when Amalfen will turn a profit. According to the listing announcement of Amalfen, in the first nine months of 2023, Amalfen's net loss was US$113.9 million, an increase of 9.1% year-on-year. And from 2020 to 2022, Amalfen's net loss has accumulated more than 600 million US dollars. In the first three quarters of 2023, its net loss increased from $104.4 million to $113.9 million.
Announcement of the submission of an overseas listing application by ANTA Joint Venture.
Although the income continues to grow, it is also an indisputable fact that Amalfen has been losing money year after year. However, Anta doesn't seem to care whether Amalfen can bring short-term profits. In recent years, the revenue data of all Anta brands has been considerable.
On January 5, ANTA released its latest operating data for the fourth quarter and full year of 2023. According to the announcement, Anta's retail sales in 2023 will achieve high-single-digit growth compared with 2022, and Anta will achieve a year-on-year growth of 10%-20% in the fourth quarter. As an important sub-brand of ANTA, Fila's retail sales in 2023 will increase by 10%-20% year-on-year, while in the fourth quarter, Fila's retail sales will increase by 25%-30% year-on-year. ANTA's other brands also maintained high growth rates online and offline in the fourth quarter, exceeding their growth targets.
Rather than achieving asset appreciation after listing, Anta may hope to use Amalfen to "exert its strength" on the international stage. Yang Dajun told a reporter from China Business Daily that Amalfen's listing in the United States will help expand Anta's international influence.
Yang Dajun further explained that on the one hand, it is very difficult for local brands to "go global", and Anta only has the relevant management rights of its overseas brands (such as Kolon and Descente) in China, and can only carry out business in the domestic market. The acquisition of Amalfen will help optimize ANTA's operation and management in the global market. On the other hand, Anta may surpass Lululemon to become the "world's second" this year, and Amalfen's listing in the United States will help Anta and Nike compete in the future.
ANTA stores. (China Business Daily reporter Tang Yan/photo)
The outdoor sports track ushered in the "overseas shopping" mode
Archaeopteryx, marmot, mountain climber, mammoth...... Looking at the distribution of outdoor sports brands in mainland China, the high-end market is almost occupied by European and American brands. Domestic sports brands have followed the trend and opened the "overseas shopping" mode of outdoor sports tracks.
Judging from the recent acquisitions, European and American outdoor brands are becoming "fragrant and sweet". Lane Capital, which has a close relationship with Li Ning, acquired the Swedish outdoor brand matchsticks, Xtep further increased its ownership of the American running shoe brand Saucony, and Sanfo Outdoor signed a joint venture agreement with the parent company of the climbing mouse. The influence of Amalfen, which was won by Anta with a huge amount of money, is also rapidly expanding under Anta's mature operation, and Arc'teryx has become the "top stream" of outdoor wear.
Ranking of outdoor sports brands with nearly 10,000 likes on the Xiaohongshu platform.
The reporter found on the Xiaohongshu platform that in the ranking of outdoor sports brands recognized by consumers, almost all of them are overseas brands. In a post with nearly 10,000 likes, Arc'teryx ranked in the first echelon of the outdoor sports brand pyramid, and the second echelon was Mammoth, Shanhao, Beimian, Kaile Stone, Matchstick and other brands. There are very few domestic brands on the high-end line.
The failure of domestic sports brands to enter the high-end market is mainly due to the late rise of outdoor sports in mainland China and the lack of experience in the manufacturing of sportswear and equipment. The wave of overseas brand acquisitions is actually another reflection of the "going overseas" of domestic products, indicating that the strength of domestic sports brands is increasing.
Ma Gang, an independent retail commentator, told China Business Daily that there are two paths for the overseas expansion of domestic products, one is to go overseas after the local brand achieves high-end, and the other is to directly acquire international high-end brands. In the outdoor sports track, domestic sports brands mainly choose the latter.
"A single acquisition, no soul. Ma Gang added that the acquisition is only a short-term activity. Clothing carries culture and aesthetics, and it also relies on cultural charm and product design to have a more complete and systematic vitality.