Andrew's Two Quarter Performance Is Lower Than Expected. What Can We Do To Save You?

American time in July 30th, Andrew announced the second quarter of 2019 earnings. Data show that revenue "big head" North American market continued to slack, the quarter revenue of $1 billion 192 million, a slight increase of 1.4% over the same period, lower than the average value of Bloomberg forecast $1 billion 198 million. The speed of inventory clearance was significantly reduced by 26% compared with the same period last year. But with the pressure of inventory, Andrew's new product development is short and lack of fashion elements for a long time, coupled with the market squeeze of traditional sports brands, the road to recovery will still be very bumpy.

1, busy with inventory, new products are hard to develop.

Andemar has also been brilliant. In 2014, Andemar's business income reached 3 billion dollars, surpassing that of Adidas at that time. As of the end of December 2018, Andrew stock amounted to $1 billion 19 million 500 thousand, a decrease of 12% from the end of 2017 at the end of 2017, benefiting from reduced sales promotion and product cost improvement.

From the second quarter report of 2019, the speed of destock has accelerated, decreasing by 26% compared with the same period of last year. This is mainly due to the growth of wholesale business, but the stock is still as high as 966 million US dollars. The speed of its destock is due to the fact that Andrew has chosen to bet on the international market, and the market growth of the Asia Pacific region and the EMEA (Europe, Middle East, and Africa three regions) in foreign markets has increased significantly, and two regions in 2018 have increased by 35.2% and 31.7% respectively. But North American fashion, which is the main source of revenue, has been declining. Sales fell 5.8% in 2018, and 3.2% in the second quarter of 2019, with revenues of $816 million.

In 2018, Andrea shifted from the focus of the North American market to the Asia Pacific and EMEA region, facing huge cost and market risks. It needs to expand stores to meet consumer demand, expand stores and increase labor costs and management costs. Second, in the Asia Pacific and EMEA regions, it will also face the market pressure of traditional world sports brands such as ADI, Nike and other local sports brands in the region.

In the second half of 2019, whether Andemar can keep the inventory in the two quarter is uncertain.

2, product homogenization, innovation and fashion are all inadequate.

With the pressure of huge inventory, Andrea can be "weight-bearing ahead", obviously lagging behind other sports brands in product development and product innovation.

The homogenization of North American market movement products is the main reason for the decline of andmar's sales. Before Nike and ADI's main online market, there was a fashion sports brand rookie Lululemon, who worked hard to fashion women's market. While Andrea, who had always been a "tough guy" image, was recognized by celebrity politicians and celebrities including Obama, and had made "hard" for free to enhance the brand value. But Andemar's research and development in the female fashion market was almost zero. Despite the rescue of andma in the Asia Pacific and EMEA market in 2018, however, after the freshness, Andrew's future can still go far.