(SGI) Anta Sports Products reported a 30.3 percent increase in net income to 5,344 million yuan renmimbi (€695.4m-$752.2m) for 2019, while revenues increased by 40.8 percent to RMB 33,927 million (€4.4bn-$4.5bn). The gross margin and the operating margin reached a five-year high, but the net profit margin fell to record low level of 15.8 percent because of its minority stake in Amer Sports.

The leading Chinese sports group continued to make a good profit last year despite a loss of RMB 633.1 million (€82.4m-$89.1m) from the inclusion of Amer Sports’ results, which are included in the bottom line since the European group became partially owned by Anta last spring, along with other investors. Anta said the loss was expected and doesn’t affect the value of its investment in the company.

Amer’s sales from March 26 to Dec. 31 were RMB 17,499 million (€2.3bn-$2.5bn), generating a net loss from continuing operations of RMB 1,003 million (€130.6m-$141.2m) and a comprehensive net loss of RMB 1,204.5 million (€155.7m-$169.7m). Comparatively, in the last three quarters of 2018, Amer had booked net income of €100.3 million on sales of €2,054.4 million.

Anta has developed a five-year development plan for Amer that calls for three of its global brands - Arc’teryx, Salomon and Wilson - to reach more than €1 billion in annual sales, contributing sales of €1 billion in China alone and boosting their direct-to-consumer (DTC) operations worldwide. In November, the group started the construction of its new global retail headquarters in Shanghai. It will serve as its global management base and international platform.

Anta said it was on track with this program for Amer in the first two months of this year, but the global spread of the Covid-19 disease has affected its implementation since March. As winter sports products play a strong role in Amer’s results, the company hopes that the virus will be contained by the start of the autumn/winter season. The company suggested that government support for winter sports will motivate a shift to greater emphasis on winter apparel.

This year, as previously reported, the management has been implementing a category management approach, appointing dedicated teams for three brand groups, one for its Sports brands, the other for its Fashion Sports brands and the third one for its Outdoor brands. The teams will be responsible for production, sourcing and retail, including e-commerce. The Outdoor Sports Brands Group comprises all the brands of Amer Sports, including Arc’teryx, Atomic, Salomon and other less outdoor-oriented brands like Precor. Descente and Kolon Sport brands are also part of this group. Peak Performance, a recent acquisition of Amer for which Anta had been bidding, has been bundled with Fila and Sprandi in the Fashion Sports Brand Group.

The Anta group’s remaining operations are still largely concentrated on Greater China, where the coronavirus epidemic has strongly affected them. The company said it expects a low double-digit decline in its turnover for the first half of this year, but a recovery in the second half should allow it to book a sales increase for the full year.

Anta said it reacted promptly in the early stage of outbreak, implementing strict cost management while investing in community marketing, building up a more flexible supply chain, promoting innovation in e-commerce and maintaining on-time logistics and deliveries.

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