Sportswear companies close stores amid slump

Six of China's leading domestic sportswear companies, including Li-Ning Co and Anta Sports Products, have closed 2,249 outlets in total in the first half of this year, amid a saturated market and competition from fast fashion companies, experts said Thursday.

Beijing-based China Dongxiang (Group) Co closed

611 Kappa brand retail outlets in the first half of this year, the highest number of closures among the six companies, according to the firms' half-year earnings report.

Also, 361 Degrees International Ltd closed 601 retail outlets, while Li Ning Co shut down 410 stores, according to the companies' first half reports.

Zhang Qing, CEO of Beijing Key-Solution Sports Consulting Co, told the Global Times Thursday that the number of outlet closures in the first half of 2013 was smaller than that in the same period of 2012.

"After going through a glorious decade when the firms opened outlets at a high frequency, the market reached the saturation point in 2012," Zhang said. "As the market demand dropped and labor costs and rents climbed, the companies had to close outlets to remain profitable."

Zhang said he expected outlet closures to continue into the second half of 2013 and early 2014.

Wang Miao, president of the China National Garment Association, told the Global Times Thursday that companies closed their unprofitable stores and reallocated resources to other outlets in order to achieve better financial results. As to when the companies will stop shutting outlets depends on their own strategies.

Revenues and net profits of the firms have dropped as well. Li Ning, for example, suffered a loss of 184 million yuan ($30.06 million) in the first six months of this year, and its revenue dropped 24.6 percent year-on-year to 2.9 billion, the company said in its report.

361 Degrees International saw its net profit plunge 65.5 percent year-on-year to 205 million yuan.

Zhang said fast fashion companies such as Japan's Uniqlo Co and Spain's Inditex Group as well as online stores selling cheap clothes are posing tough competition to China's sportswear companies.