Lining's Brand Fundamentals Turn To Good Industry Prospects

In the first half of this year, Li Ning Co realized revenue of 2 billion 906 million yuan, a year-on-year decrease of 24.6%, net profit loss of 184 million yuan, and a profit of 44 million 290 thousand yuan in the same period last year. Li Ning Co said the decline in performance was partly due to the challenges of the industry environment and the impact of the first phase of the company's change plan on financial performance, including optimizing the store network, reducing shipments to distributors, and improving channel inventory.

　 Fundamentals turn better.

Although Li Ning Co's revenue declined in the first half of last year compared with the same period last year, the first phase of the change plan was successfully completed, and the following achievements were achieved: clearing channel inventory and reducing the pressure on distributors, enhancing the financial situation of dealers, adjusting the scale of business, optimizing the store network, upgrading sales performance of new products, improving cash flow and optimizing capital structure. Li Ning Co said that the company will move forward in the second half of the year.

At a news conference held in Hongkong, China in August 12th, Jin Zhenjun, executive vice president of Li Ning Co, pointed out that only a few financial indicators of Lining were not comprehensive. We should see the fundamental change of the whole company's mode and the momentum of a good turn.

Jin Zhenjun gave two reference indicators, one is cash flow improvement and capital structure optimization, cash and cash equivalent items increased by 376 million yuan to 1 billion 618 million yuan, and the ratio of capital to liabilities is 49.9% (130.8% at the end of last year). The two is the reduction in the number of stores. In the first half of this year, the company closed only 410 stores, compared with 1200 last year. In addition, Li Ning Co self owned stores achieved a 9% increase in sales in the same store. The former means that the phenomenon of deteriorating operation caused by inventory is gradually improving, and the latter means that the transformation from wholesale to retail has been effective.

"Based on the transformation of sports marketing and retail oriented business mode, we will continue to optimize the retail store network and build a leading industry development platform." Lining told reporters that in the first half of this year, the company closed down a certain number of inefficient stores, and also opened a new efficient shop. The closing of stores and rationalization of sales network have made great changes in the sales network of the company.

Li Ning Co said it is "very satisfied with the current shop network", and stressed that "the number of shops is not the most important. Improving the profitability of shops is the focus of our work". It is understood that Li Ning Co based on shops profit and cost savings as the principle of assessment, structural adjustment of shops and closure of inefficient stores.

"In the first half of the year, the company opened an efficient shop directly operating or working with several major distributors." Lining disclosed.

　　 Optimistic about the future of the industry

Jin Zhenjun introduced at the China daily press conference that the company's operating cash flow and dealer partners' profitability will continue to be a positive trend in the second half of the year, and there will be no inventory problems. The channel revival plan, which began at the end of 2012, has been completed by 50%. Lining has gone through the hardest part. After the implementation of the huge channel recovery plan, Lining will be profitable at any time.

It is understood that after the start of the reform program, the performance of Li Ning Co's new products has been significantly improved, the discount rate of the price tag has been greatly reduced, and the profit margin has been raised. In addition, since the beginning of 2013, Li Ning Co has introduced a new business model that combines "guided order + quick replenishment + quick response" to effectively improve the dealer's order guidance and goods arrangement.

Li Ning Co introduced that the transformation of the company has gradually entered the in-depth implementation of the second stage of mid long term reform. This stage will comprehensively improve the supply chain, listing and product planning, establish a retail oriented business mode, and create more first-class products and customer experience.

According to the China Daily, although the sales revenue of the company still declined in the first half of this year, the company indicated that the company was leading the industry from wholesale mode to retail business mode. With the smooth progress of the reform plan, we believe Li Ning Co will rebuild its brand in the best position and consolidate its position in China's leading sporting goods brand.