Anta to launch 600 new stores

China's leading sports brand Anta plans to launch 600 new stores this year, despite a previous claim by the company's CEO that expansion would be controlled, according to Beijing Business Today.

Anta opened 600 new stores last year, but its profitability is declining. Sales revenue in the first half of 2012 was 3.934 billion yuan, an 11.6 percent drop on the same period last year. Net profit attributable to shareholders fell 17 percent to 770 million yuan, the company's interim report said.

The outlook for the second half of 2012 remains dim due to high inventory and substantial product discounts. Orders for the first quarter next year have also shrunk by 20 to 30 percent, according to a company announcement.

Analysts said Anta was probably "forced" to implement expansion plans due to the sluggish economy.

"Although the company's overall profitability is declining, launching new stores in second- and third-tier cities would still be profitable as the costs involved are relatively low," brand analyst Xu Ning told Beijing Business Today.

Xu said there is huge market space and development potential in China's second- and third-tier cities and rapid expansion might be an effective way of making money against the backdrop of a downturn in Chinese sports brand sales.

Anta, traditionally a makers and retailer of sports shoes, is also moving into sports clothing as way of diversifying its product lines and in the hope of reversing the downward sales trend.

"Sales revenue from the Anta children's series, due to launch this year, is expected to make up 5 percent of the company's total revenue in three years," Anta's COO Lai Shida told Beijing Business Today.

"We are now one of the four leading sports brands in the Chinese mainland?and we will target the mass market in the future."

Brand analyst Xu Ning said Anta's shift from the shoe to clothing business is consistent with the development path of many mainstream international sports brands and added that clothes are likely to become Anta's new moneymaker.