Li Ning Closes Hong Kong Store To Save Himself

　　 Li Ning The company is trying to "make change happen".

On September 12, Li Ning (02331. HK) confirmed that its Hong Kong Tsimshatsui branch was closed at the beginning of this month, which was the only branch of Li Ning in Hong Kong and settled in October 2009. Li Ning did not take a positive stance on the reasons for the closure of Hong Kong stores, but said from a macro strategic perspective that the purpose of closing Hong Kong stores was to pay more attention to the mainland market.

A person engaged in sports marketing believes that according to the current situation of Li Ning, Mainland market There is still too much time to deal with the problems. Closing Hong Kong stores and shrinking the international market front is equivalent to cutting off your arms and saving yourself. In terms of communication, it will affect the international image of Li Ning brand, but in terms of practical significance, it can reduce the bleeding points of the company.

　　 International stop?

Behind the official statement of Li Ning, there are more realistic reasons for the closure of Hong Kong stores.

The cost pressure caused by bad stores is the main reason for closing stores. On August 22, when the semi annual report of Li Ning Company was released, Jin Zhenjun, Executive Vice Chairman of Li Ning Company, said that in order to save costs, Li Ning Company had closed 1200 stores in the first half of the year as a whole, with the proportion of closed stores reaching 15%, and the standard of closed stores was inefficient stores.

This is the second time in nearly two months that Li Ning has encountered similar problems. On July 9, Li Ning confirmed that it had received LN PLUS IBEROAMERICA S.L. on July 4 this year. (Authorizer) informed by email that due to the deterioration of the Spanish market environment and its own poor operation, it applied for bankruptcy.

When it opened in 2009, the Hong Kong store was regarded as an international bridgehead by Zhang Zhiyong, then CEO of Li Ning. At that time, the role of Hong Kong stores was to test Li Ning's products and pave the way for brand internationalization. According to his plan, Li Ning will become one of the five major sports brands in the world by 2018. At that time, more than 20% of Li Ning's income will come from overseas markets. By the end of 2009, it will open 70-100 badminton stores in Southeast Asia.

Public data shows that in 2010, the overseas revenue of Li Ning accounted for 1.4% of the total revenue, while in 2011, the proportion was about 1.9%. Compared with the established plan, the proportion of overseas revenue of Li Ning has not changed significantly in the past three years. With the bankruptcy of Spanish licensors and other events, the internationalization goal of Li Ning Company cannot be achieved in the short term.

The aforementioned marketing personage said, "Li Ning's more important problem now is how to achieve self rescue. From Li Ning's return to the company's management and Zhang Zhiyong's resignation, it can be seen that Li Ning himself has realized the severity of the challenge."

Li Ning said that after all, there are many situations in the overseas market that are different from the mainland market. The business in overseas markets, including Hong Kong, is still an exploration stage and should be carried out in a risk controllable and cost controllable way. At present, the company's strategy is still focused on the development of the mainland market.

　　 Difficult self rescue

At the same time of international contraction, Li Ning has determined the strategy of "self rescue".

The first stage of the strategy is to improve channel inventory and channel profitability; The second phase will focus on improving the Group's supply chain, marketing and product planning models, including product development and consumer experience; The third stage will improve the profit structure and channels, retail efficiency, and cash and return on investment.

Clearing the inventory has become an inevitable step for Li Ning to "save itself". The 2012 semi annual report shows that the inventory of Li Ning has not improved in the first half of the year, and its average inventory turnover period has risen to 95 days. According to the 2011 annual report data of Li Ning, the average inventory turnover days in 2011 were 73 days, 21 days more than 52 days in 2010, and almost twice as many as Anta Sports, which had the fastest turnover speed.

According to the 2011 annual report, the inventory of Li Ning Company in 2011 was 1.133 billion yuan, up 40.64% from 806 million yuan in 2010. The high inventory increased Li Ning's inventory provision to 188 million yuan in 2011, a 63.48% increase over the same period in 2010.

On June 12, according to Li Ning's announcement, the company's order amount in the fourth quarter showed a high double-digit decline. Among them, shoes The order amount of Class A products showed a low double-digit decline, and the average retail price and order volume had a low number of units and a low double-digit decline respectively. clothing On the other hand, the order amount declined by more than 20%. Li Ning predicted that the annual loss would be 226 million yuan.

The aforementioned sports marketers said that for the sports goods industry, high inventory is extremely harmful, and will have adverse side effects on the entire chain from design, procurement to sales. Therefore, Li Ning's approach is correct.

For Li Ning, which announced its "self rescue" plan two months ago, the challenge is still severe. Li Ning's financial report for the first half of 2012 showed that the company's revenue in the first half of 2012 was 3.88 billion yuan, a year-on-year decrease of 9.5%; The net profit attributable to shareholders of the listed company was 44 million yuan, a year-on-year decrease of 84.9%. In contrast, Anta The turnover of sports in the first half of the year was 3.934 billion yuan, and the net profit was 770 million yuan.

According to the relevant statements of Li Ning Company and the three-stage "self rescue" rhythm arrangement, the improvement of channel inventory and channel profitability can be achieved at the earliest or in the second half of the year. However, Bank of America Merrill Lynch pointed out that there are still unstable factors in the operation reform of Li Ning Company, and it is expected that the profitability will not improve until the second half of next year.