Anta Sports Products Ltd. shares fell as much as 7.4 percent in Hong Kong after the company reported a lower-than-expected operating profit margin for 2024.
China’s biggest sportswear maker saw its operating margin decrease by just over a percentage point to 23.4 percent last year, missing analysts’ estimate of 24.4 percent. The year-on-year decline is due to increased spending on branding, sales channels and research and development, the company said in its earnings statement.
“Anta’s second-half operating-margin drag from steeper-than-expected selling expenses could ease as the cessation of its Chinese Olympics Committee sponsorship spurs related cost savings in 2025,” Bloomberg Intelligence analysts including Catherine Lim wrote in a research note.
Shares later pared losses to 3.7 percent on Wednesday in Hong Kong. So far this year, the stock has risen 26 percent.
Its revenue rose 13.6 percent to 70.8 billion yuan ($9.79 billion) last year, surpassing analysts’ estimate of 69.4 billion yuan. The Anta brand’s revenue posted an 11 percent increase last year, while growth of its sports fashion brand Fila slowed to 6.1 percent. Revenue of all other brands rose significantly by 53.7 percent, driven by continued strength in niche outdoor-wear labels Descente and Kolon Sport.
The company, which signed NBA star Kyrie Irving to a five-year deal, saw demand surge in North America after debuting Irving’s shoe, Kai 1, in March last year. More importantly, a relentless domestic appetite for Anta products supported the sportswear brand amid China’s broader consumption slowdown.
“We remain cautiously optimistic about China’s economy, where the sports industry continues to expand with strong development potential,” Anta chairman Ding Shizhong said in the earnings statement.
The company’s performance going ahead is expected to be supported by China’s measures to boost consumption. Anta Sports is Citigroup Inc.’s top buy in the China sportswear sector, according to a research note following the government’s action plan to revitalise consumption.
Anta Sports has already had a good start to 2025, with sales in the first two months at the company’s four major labels — Anta, Fila, Descente and Kolon — estimated to have jumped by as much as 60 percent, according to Bloomberg Intelligence report, citing Shang Zhi Zhen data from China’s four leading e-commerce platforms.
By Bloomberg News
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