In mid August 2024, Swiss running shoe sports brand ON released its second quarter quarterly report and first half half report as of June 30: the brand recorded 567.7 million Swiss francs (approximately 4.694 billion yuan) in the second quarter of 2024, a year-on-year increase of 27.8%, and a growth rate of 29.4% calculated at a fixed exchange rate. In the first half of this year, the brand's revenue reached 1.076 billion Swiss francs (approximately 8.896 billion yuan), a year-on-year increase of 24.4%, and a fixed exchange rate increase of 29.3%.
In the second quarter, the brand's DTC business grew by over 30% at a fixed exchange rate, and in the first half of the year, the DTC business grew by nearly 40% at a fixed exchange rate. In terms of regional markets and category distribution, the Asia Pacific region and the clothing industry performed outstandingly in the second quarter, with year-on-year growth of 73.7% and 63.0%, respectively.
Looking at the entire first half of the year, ON's main market is still the Americas market, which contributed 700 million Swiss francs in revenue, accounting for nearly 70%. In the Middle East, Europe, and Africa regions, the sales revenue was 265 million Swiss francs, while in the Asia Pacific region where the Chinese market is located, the revenue was 111.6 million Swiss francs.
In terms of category, ON's footwear contributed 1.027 billion Swiss francs, accounting for over 95% of the business. However, clothing and accessories only cost 41.6 million Swiss francs and 7.1 million Swiss francs respectively.
Despite a slowdown in the growth rate of global sports brands, the Angpao still managed to achieve a growth rate of nearly 30%, despite a decline from last year's growth rate of over 40%. However, with an annual volume of around 2.5 billion US dollars, it still belongs to niche brands such as HOKA. Its size is only a quarter of Lululemon and a twentieth of Nike's.
Like brands like HOKA, ON Running is also in a fiercely competitive running shoe market. At the just concluded Paris Olympics, the marathon event received high attention. Global sports giants such as Nike and Adidas are also involved in intensifying the fierce competition in this niche market.
In the Chinese market, the level of competition in the running shoe segment market far exceeds that of the global market.
The competition in the global market is mainly dominated by niche running shoe brands such as ON, HOKA, Brooks, etc., which are challenging the market share of Nike and Adidas. Competitive comprehensive sports brands in this market also include New Balance and PUMA.
But in the Chinese market, the intensity has intensified. Xtep and its acquired operator, Sokoni, have added all heavy codes to the running segment. Among the four major domestic sports brands listed on the Hong Kong stock market, only Xtep hardly participates in the basketball segment, and all focus on the running segment market. And ANTA, Li Ning, and 361& deg; It is a two pronged approach, competing fiercely in both the running and basketball sub markets.
Therefore, in the running segment of the Chinese market, there are both Nike and Adidas holding onto the market share of this segment, as well as four major domestic sports brands fiercely competing in the running market, including ANTA's Olympic Technology and Li Ning's, almost all of which apply their independently developed latest midsole technology to running shoe products. PUMA、New Balance、 International brands such as Skechers are also trying to compete for market share in the running segment. There are also niche sports brands such as Arthurs, HOKA, and ON Run that are known for their running shoes, as well as niche running shoe brands such as Brooks that have returned to the Chinese market.
As for brands known for their running shoes, ON Run's annual revenue of around $2.5 billion is still a niche market. Arthur Shi, who released its semi annual report a day earlier, is also known for running shoes. Japanese brands generated a revenue of 342.2 billion yen (approximately 16.6 billion yuan) in the first half of the year, a year-on-year increase of 18%, with an annual volume of around 10 billion US dollars.
In fact, several sports brands with an annual volume of around 10 billion US dollars, including Arthurs and Lululemon, have encountered a slight slowdown in growth rate when their annual revenue surges to 10 billion US dollars, with almost all growth rates falling from the 30-40% range to the 15-20% range.
When the scale reaches a certain level and the competition in the Chinese market for running shoes is particularly fierce, it is difficult to provide high-speed growth drivers for these brands. Therefore, while lululemon is expanding into the men's and footwear markets, brands such as Arthurs are also seeking markets outside of running shoes to maintain growth.
Therefore, top-level sports arenas like the Olympics have also become a marketing focus for major brands. Compared to ON Sport, brands such as Arthurs and Lululemon are seeking closer ties with the Olympics. For example, Arthur Shi was an official partner of the previous 2020 Tokyo Olympics and also reached an official cooperation agreement with the Japanese delegation. Similarly, Lululemon has partnered with the Canadian team, while PUMA has signed multiple Olympic track and field champions, and Skechers has also signed athletes to participate in the Olympics. And ON Running has little to do with the Olympics.
Overall, the fierce competition in the running shoe market means that there is intense competition in areas such as technological innovation, product release, channels, and marketing. Meanwhile, in this fiercely competitive niche market, the brand effect is weakening, and the most critical factors are still product competitiveness and cost-effectiveness.