Peak seized by Sequoia Capital or due to decline in performance

Peak Sports is experiencing an eventful fall.

According to the latest information from the Stock Exchange, Peak Sports recently suffered a reduction of 5,004.47 million shares from the Sequoia Capital Market. The average price per share was 1.27 Hong Kong dollars, involving a total investment of 68.586 million Hong Kong dollars, and the position was reduced from 6.22% to 3.65%.

Prior to 2009, Peak Group received nearly 60 million U.S. dollars worth of investment from Sequoia Capital China Fund, CCB International, and Legend Capital's three private equity investment institutions. After financing, the three strategic investors accounted for approximately 24% of the shares.

Sequoia Capital is making a big cut in Peak, or based on the downturn in the sporting goods industry and Peak's declining performance.

In terms of terminal channels, Peak's stores in the third quarter of this year have closed more than 1,000 stores at the end of 2011, becoming the largest number of Zhongguandian stores in China. In the first half of the year, Peak's net profit dropped by 43.3% to only 240 million yuan. The average turnover of retail outlets in China and the average turnover per unit of retail space decreased by 30% and 34.3% year-on-year, respectively. The average inventory turnover days were also From 49 days to 86 days.

Among the local sports brands, Peak has been at the forefront of the internationalization route and Peak’s largest overseas market is in the Middle East. But in the Chinese market, Peak is based in second and third-tier cities. An industry person with a long-term focus on sports brands told the China Business News that Peak's channel capabilities in China are not strong.

However, Peak Chairman Xu Jingnan recently said in an exchange with the media that starting from the second quarter of next year, Peak will adjust discounts for domestic distributors, the company will receive a 3.5% discount, and retailers will receive a 4.3% discount (up from a previous discount of 50%). Profit space to promote the company's development.

Peak’s investment in R&D has also been low. Last year, Peak’s R&D expenses as a percentage of turnover reached a record high of 1%, but it was also far below the industry average of 2.4% for R&D investment.

Compared to international brands such as Nike, Adidas, etc., they never gave up on the high-end and long-term investment in research and development. The development of a single Nikoshox shoe took 16 years. At present, Nike spends 4% of its revenue each year on product research and development.

In addition to this, there was a recent rumors that Peak "has been negotiating with Li Ning to restructure under the auspices of a world-renowned investment bank." Subsequently, the rumor was denied by both parties.

For Peak's headache, there is an ongoing lawsuit.

Peak's event service provider Moxin Business Consulting (hereinafter referred to as “Moxin”) sued Peaker not paying the service fee according to the contract, but Peak countered Moxin not providing detailed expenditure details, and therefore refused to pay related expenses. The case has been held several times since 2010 and has not yet yielded results