As FILA continues to grapple with significant challenges, it serves as a telling case study in the competitive landscape of China's sports apparel market. Once heralded as a powerful brand under Anta Sports, FILA now finds itself in decline, marking a pivotal moment for both the brand and its parent company.
The trajectory of FILA has transformed from a beacon of growth to a concern for Anta. In the third quarter of 2023, FILA became the only brand in Anta’s extensive portfolio to report negative growth, a striking shift that raised alarms among investors and market analysts. While Anta’s flagship brand experienced modest growth in the mid-single digits, FILA reported a decline in the low single digits after several years of contributing significantly to Anta’s profitability.
The figures speak volumes: FILA had accounted for approximately 45% of Anta's overall profit in recent years, a share that previously eclipsed even the 50% mark. The brand's high gross margin—hovering around 70%—positioned it as a linchpin in Anta's financial success. However, as we entered 2024, the signs of strain became increasingly evident. Anta's main brand demonstrated robust growth with a 13.5% increase, whereas FILA lagged behind with only a 6.8% revenue growth in the first half of the year. This stark contrast has raised questions about FILA’s future role within Anta’s strategy.
FILA’s evolution into a prominent player within China's sports industry was fueled by its acquisition by Anta, which enabled the brand to thrive in a competitive market dominated by both domestic rivals like Li Ning and international giants such as Nike and Adidas. The brand carved a niche that appealed to urban youth and white-collar workers, establishing itself as a go-to choice for fashion sportswear. Yet, as consumer preferences shift towards more personalized and premium offerings, FILA's allure has waned. In a marketplace increasingly led by niche outdoor and tech-oriented brands, FILA now appears out of step with current trends.
The competitive pressure from international brands has only compounded FILA's woes. In 2024, both Nike and Adidas revitalized their marketing strategies in China, launching collections that resonate more closely with younger consumers, thereby siphoning market share from FILA. This scenario illustrates a broader shift in the market where consumers are demanding more innovation and relevance in their athletic wear, leading to a decline in FILA's attractiveness.
Meanwhile, Anta has witnessed flourishing growth through its high-end brands like Arc'teryx and Salomon. These brands, capitalizing on a rising outdoor sports trend, reported impressive growth rates, in stark contrast to FILA. With a gross margin of 72.7% across other brands, Anta's shift towards these premium lines showcases the company's strategy to pivot away from a faltering FILA.
The changing dynamics of the athletic apparel sector present a complex landscape. On one hand, there is a surge in demand for technical gear, spurred by the increasing popularity of outdoor activities like hiking and skiing. On the other hand, the sportswear market has also seen a boom in traditional running shoes, with marathons becoming an ever-present fixture in China's sporting calendar. Between the two lies FILA, increasingly alienated from both the dominant outdoor and high-performance trends.
FILA's struggles are particularly stark compared to its competitors. Brands that maintain an affordable positioning, such as 361 Degrees, have reported growth rates of around 19.2%, underscoring that FILA’s mid to high-end market positioning does not align well with the ongoing trend of consumer downscaling. Conversely, premium brands like Arc'teryx and Salomon are realizing growth rates of 40-50%, illustrating how the market is bifurcating between luxury and budget segments.
In response to the urgency of the situation, Anta is actively seeking new growth avenues. The company's investment in running footwear—tapping into the burgeoning market of over 300 million potential runners—is just one aspect of its renewed strategy. Anta's recent acquisition of a local yoga apparel brand, MAIA ACTIVE, further illustrates its commitment to diversify and respond to new consumer trends, particularly within the lucrative women's activewear space.
The transformation of FILA from a star performer to a consistent underperformer highlights the tumultuous nature of brand dynamics in the sports apparel sector. Anta’s reliance on FILA as a growth engine is fading, pushing the company to explore less traditional routes for revitalization. Whether through innovation in existing brands or strategic acquisitions, Anta must re-evaluate its positioning to maintain its stature in an increasingly competitive landscape.
The question that now looms is whether Anta can steer itself away from the pitfalls that have ensnared FILA and reclaim its leadership status in the athletic apparel market. The path forward will undoubtedly require a critical reassessment of FILA’s brand strategy and a potential pivot towards more dynamic and relevant market segments. As Anta charts this course, the fate of FILA remains a key variable in the equation.