Lining Closed Hongkong Store High Inventory But Discounted Selling

In 2010, Lining's overseas income accounted for 1.4% of total revenue, and in 2011, the proportion was about 1.9%.

Following

In September 12th, Lining confirmed that the company's Hongkong Tsim Sha Tsui branch was closed early this month, which is the only branch of Li Ning Co in Hongkong.

For the repeated setbacks in overseas markets, Lining only revealed that he will focus on domestic issues in the future.

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For overseas markets, companies will explore risks in a controllable and cost controllable manner.

Overseas market is not optimistic

It is understood that the closed Hongkong Tsim Sha Tsui branch is the only branch of Li Ning Co in Hongkong, settled in October 2009, then contracted for 2 years, with a monthly rental of HK $450 thousand.

Lining's store in Hongkong has been seen as a bridgehead for the company's overseas development, and the closure of Hongkong stores is a reflection of whether the company's overseas business is going to stop.

Industry independent commentator Ma Gang believes that "similar markets in developed countries such as Europe and America are very mature, and it is very difficult to sell in a mature market.

The sporting goods market in Europe and North America has been quite mature, and Nike and Adi have been expanding for many years, leaving the market for local brands to be quite small.

In this regard, Lining also revealed the difficult situation of overseas development.

Public data show that in 2010, Li Ning Co's overseas revenue accounted for 1.4% of total revenue, and by 2011, the proportion was about 1.9%.

To be honest, Lining does not have much overseas market share. From the company's overseas earnings, it is also difficult for the company to expand its overseas business.

It can be imagined that Lining's competition with Nike or ADI and other world-class brands in the overseas market will be far more than that of domestic development.

Wang Qian told reporters that Lining's foundation in China did not stand firm. Under this premise, it is unwise to compete with overseas famous brands such as Nike and ADI in overseas markets.

Wang Qian suggested that Lining should mainly develop the domestic market, first lay the foundation in the domestic market and then develop the overseas market.

Inventory backlog is hard to get rid of

Since China hosted the Olympic Games in 2008, there has been a movement boom, and major sporting goods companies have also increased horsepower production sports products.

It is precisely in the miscalculation of the consumer market, the current major sports brand businesses are facing a problem - high inventory.

Analysis of the industry, the current domestic sports

The industry has entered the second half of the mature stage, and the biggest feature of the industry is the decline in scale growth, high market concentration and high inventory.

2011 Annual report shows that Li Ning Co's inventory in 2011 was 1 billion 133 million yuan, an increase of 40.64% over the 806 million yuan in 2010.

Higher inventories increased Lining's inventory provision to 188 million yuan in 2011, a 63.48% increase over the same period in 2010.

Lining is facing not only the problem of high inventory but also how to digest inventory.

The semi annual report 2012 showed that Lining's inventory didn't improve in the first half of the year, and its average inventory turnover period increased to 95 days.

In the case of shrinking consumer market, sporting goods manufacturers have launched various discount products to digest inventory, and thus set off a discount boom.

In addition to high inventory problems, Lining's fourth quarter high order double digit decline is even worse.

Lining's 2012 half year earnings showed that the first half of the company was 3 billion 880 million yuan in the first half of the year, down 9.5% from the same year, and the net profit attributable to the shareholders of the listed company was 44 million 300 thousand yuan, a 84.9% decrease over the same period.

In contrast,

In the first half of the year, the turnover was 3 billion 934 million yuan and the net profit was 770 million yuan.

It is understood that Lining will focus on the inventory problem, although the company expects to clear inventory in 1 to 2 years, but considering the market consumption and other issues, the company has no bottom.

In fact, the entire sporting goods industry is facing a high inventory test.

The problem of high inventory is widespread, leading to the downgrading of sports equipment companies.

Goldman Sachs said that mainland China's brand faced several structural problems, including slowing demand for terminal demand, strong competition from global brands such as Nike and Adidas, as well as low brand equity and lack of differentiation.

The cyclical problem of excessive channel inventory makes things worse.

The bank expects several quarters of disappointing data before the cyclical headwinds dissipate.

Even then, the bank believes that structural problems may limit the average sales growth in 2014 by 12%.

Goldman Sachs believes that Lining and Anta may survive in the market competition, but the prospect of small market value brands is hard to ascertain.

The industry's earnings per share for 2012-2014 years were down 8%/3%/10% on average.