Lining Will Integrate Poor Performance Stores To Boost Revenue Growth

Due to the second quarter of next year Order The impact of the decline in the value of the stock price fell nearly 16% in December 20th, and the market value evaporated more than 35 billion Hong Kong dollars a day, Li Ning Co (02331.HK) yesterday's Price of stock It also failed to stop the fall market, down 5.26% again, closing at HK $16.94.

Analysts say that in addition to the year-on-year reduction in orders, the market is worried that sporting goods companies have already met the "ceiling" by relying on the new store's thickening performance, Li Ning Co and other domestic sports. brand It is imminent to change the way of growth that has been pursued for many years.

Besides, Lining The extraordinary China, which wants to shell out, recently disclosed that the GEM Listing Committee of the HKEx has ruled that the extraordinary Chinese acquisition of Lining is about 30% stake in the anti takeover transaction. Up to now, it has been ruled out as an anti takeover transaction, and no successful case has yet been passed. This is undoubtedly a major blow to the entry of Li Ning Co into the sports industry. The announcement of the special day has appealed against the ruling of the listing committee.

Li Ning Co sources said that the future will integrate a number of poor performance stores, through the promotion of single store sales revenue to promote the growth of company performance, but did not disclose the specific number of stores. Insiders said that the number of Lining shops could reach 500~600. As of June 30th this year, the number of Lining's brand shops was 7478.

The Li Ning Co said recently that the order of Lining products will end in the second quarter of fiscal year 2011. The total value of orders calculated according to the retail tag price is equivalent to that of the same period in 2010, of which the average retail price of clothing products and shoes has risen by more than 8%, but the number of orders has decreased by more than 7% and 8% respectively. The impact of the calculation group's adjustment on wholesale discounts to dealers was reduced by about 6% compared with the same period in 2010.

Compared with the 6% decline in Li Ning Co orders, the orders of another domestic sporting goods company appeared to be "more beautiful". The announcement of Singapore listed China Hongxing Sports Limited (hereinafter referred to as "China Hongxing") in November this year shows that the order amount for 2011 spring and summer orders will be 849 million yuan, an increase of 24.9% over the same period last year.

Insiders pointed out that the growth of the order amount of China Hongxing can not represent the whole industry. In 2009, the performance of the major sports brands in China increased significantly, and the performance of China Hongxing was not increasing or decreasing because of various factors. After adjusting, the performance of China's Hongxing started to rebound this year. The situation is more unusual than that. In fact, the major sports brands including Lining, this year, are facing great pressure. Yesterday, Anta, XTEP, and 31st degree share prices had a different range of {page_break}.

However, the opening of new stores is a major driving force for the growth of sports brand performance in China, but the huge increase in rent in recent years has made it harder to make money in new stores. A sporting goods dealer told reporters that in some prefecture level cities in Sichuan, the rent of the stores has exceeded 10 thousand yuan per square meter, and the rent has increased by 10%~20% per year. The rent level in some areas is almost the same as those in Shanghai.

The main markets of Li Ning Co are provincial capitals and local cities in China. As of June 30th this year, Lining added 229 new stores, of which more than 70% of new shops were concentrated in two or three cities in China.

Li Ning Co CEO Zhang Zhiyong said: "sports goods retail market is facing heavy pressure. On the one hand, the growth mode of relying on a large number of new stores has been difficult to sustain. On the other hand, the cost of operating terminal retail stores is increasing, which makes Li Ning Co dealers more cautious about the growth prospects of the next year.

To help dealers cope with the pressure of rising costs, Li Ning Co said it would increase the discount rate to dealers. According to the insiders, the discount rate of Li Ning Co's wholesale to dealers is 57%~58%, and the discount rate will increase by 2~3 percentage points after adjustment. For the specific increase in discount rate, Li Ning Co people are not aware of the situation.

The sales revenue of Li Ning Co's existing stores still has much room for improvement. Sporting goods observer Ma Gang said, in 2009, for example, Lining brand's revenue was 7 billion 700 million yuan, in 2008 was 6 billion 350 million yuan, in 2009 increased by 1 billion 350 million yuan. In 2009, the number of Lining's brand stores was 7249, with an average output of 1 million 60 thousand yuan per store and 1004 stores in 2009. As a result, the new store contributed 1 billion 60 million yuan to Lining's performance, accounting for 80% of the new business income of 1 billion 350 million yuan in 2009, which shows that the growth of Li Ning Co's stores in 2009 is not high.

Ma Gang also said that Lining's brand contributed most of the revenue of Li Ning Co. The income of single brand creation exceeded 7 billion yuan, has reached a very high level. It is not realistic to expect Lining brand to continue to grow substantially; Li Ning Co also has sub brands such as "Lotto", "new move", "Ai Gao" and "red double happiness", but the income from contribution is not large. There is still great potential to be excavated, so the foundation of Lining's growth will be generous.