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Lining Warning: Half Year Net Profit Margins Halved

2011/7/9 9:15:00 58

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Lining

(02331, HK) this year's biggest sportswear manufacturer in China has been embarrassed this year. Yesterday (July 7th), the company issued an early warning that profit growth and gross profit margin were expected to decline in the first half of this year compared with the same period last year, due to rising raw material prices.

Bad news release.

Price of stock

The crash fell sharply, with a daily drop of 15.77%.

Yesterday, the company said in its earnings warning notice that the company's net profit margin will fall to 6%~7% from the same period last year to 12.9% at the end of June, and the overall revenue will also decrease by 5% compared with the same period last year. Gross margin will fall 1 percentage points, while the overall cost rate will increase by 7 percentage points over the same period last year.

It seems to be expected that in December last year, the company announced that the second quarter of 2011 Lining products.

Order-placing meeting

On average, the average retail price of clothing and shoes rose by more than 8%, and the number of orders decreased by more than 7% and 8% respectively. The total amount of orders decreased by about 6% compared with the same period last year.

From then on, Lining's share price went down all the way.

In May of this year, Li Ning Co again broke out of the company's chief operating officer, Guo Jianxin, chief market official Shiwei and director of e-commerce Department Lin Ling resigned, the biggest turbulence since the establishment of the company.

According to Lining's earnings report for the same period last year, the company's revenue in the first half of 2010 was 4 billion 504 million yuan, an increase of 11% over the 4 billion 51 million yuan in 2009. At the same time, the cost of sales in the first half of this year increased by more than 10% compared with 2 billion 115 million yuan in the same period of the previous year.

Publicly available data show that in 2010, the company had 129 distributors and more than 2000 distributors.

Most distributors are relatively small in scale and operate 2 stores on average.

In fact, more than 1700 distributors operate only 1 stores.

Behind this "small and scattered" distribution team, it is uneven management capabilities.

"We note that most retailers' retail management capabilities, procurement capabilities and product lifecycle management are relatively weak, resulting in their single store benefits and operating margins are not ideal."

Li Ning Co has said.

In fact, after the 2008 Olympic Games, domestic sporting goods began to shuffle, while the whole industry showed signs of slower growth.

The holding of the 2008 Olympic Games made Lining, Anta, XTEP and China (KAPPA) grow in revenue or turnover over the same period of 50% over the first half of the year. At that time, XTEP's revenue increased by 174.3% over the same period of the year. In the first half of 2009, the highest turnover in the 4 enterprises was the trend of China, which was only 33.5%. In the first half of 2010, the 4 largest business growth rate was Anta, which was 22.6%.

In this announcement, Li Ning Co in the future outlook, still put the channel reform in the first place, including strengthening the management of the retail market, improving the efficiency of retail.