Lining First Quarter Sales Decline Will Take The Old Road To Increase Physical Stores

In China, Lining is a big domestic brand. Lining's business covers clothing, shoes and basketball. In the past quarter, Lining's sales have dropped. Lining group will take the old road and open a large number of stores.

Lining, who is out of the mire of losses, has a long way to go.

Recently,

The first quarter results released in 2016 showed that Lining brand sales in the same store only recorded low single digit growth, much lower than that in 2015, which means that the profitability of Lining retail stores has declined. What is worth noting is that the growth rate of the electricity business, which is regarded as the focus of development by the major enterprises, has begun to slow down.

The industry believes that Lining, who has been losing money for three years, seems to have to follow the old path of expanding development after losing the deficit. However, Lining's continued profitability in the future remains to be tested.

Declining profitability of retail stores

Lining, who recently made profits in 2015, recently released preliminary data in the first quarter of fiscal year 2016, although no detailed figures were mentioned, but the information revealed was greatly slowed down.

Lining's first quarter financial report shows that as of the first quarter of March 31, 2016, Lining's same store sales overall recorded low single digit growth, which also shows Lining from the side.

The overall profitability of the business declined.

It is worth noting that the growth of e-commerce business as the focus of development in the next few years has slowed down significantly in the first quarter of this year.

It is understood that Lining's first quarter growth in the same store is mainly driven by the growth of electricity supplier channel sales.

Data show that Lining business platform business growth 60%-70%, but this year's growth of 95% compared with a substantial slowdown.

As of March 31, 2016, the number of sales outlets of Lining brand in China totaled 6106, representing a net decrease of 27 compared with the end of last year.

However, Lining, executive chairman and acting chief executive of Li Ning Co Ltd, said that considering the economic factors, Li Ning Co Ltd generally chose to close the low profit point of sale at the beginning of the year, and the sales network gradually expanded after the Spring Festival holiday.

The target of a net sales increase of 300-500 in 2016 will remain unchanged.

Losses are still lagging behind competitors.

Reporters read over the years of financial reports found that in 2010, Lining was the most prosperous period, when the operating income amounted to 9 billion 478 million yuan.

But it did not last long. The sudden winter of 2011 caused a great blow to Lining. During the 2012-2014 years, the loss amount of Li Ning Co Ltd was 1 billion 980 million yuan, 390 million yuan and 780 million yuan respectively, and the accumulated deficit in the three years was 3 billion 100 million yuan.

In order to revitalize the performance, Lining returned to the front line in 2015, and the performance of Li Ning Co also gradually recovered. In March 17th, Lining reported in 2015 that the annual revenue was 7 billion 89 million yuan, up 17% compared with 2014, and net profit was 14 million yuan, and clothing and footwear business achieved nearly 50% performance growth.

This is the first time that Lining has made a profit since 2012. It was also the result of the 2015 year earlier "Gymnastics Prince" Lining's re emergence and overall management of the company.

Despite the turnaround, Lining, who has been looking for a change, is no longer the boss of the Chinese market. After Anta's 2015 earnings report, the Chinese local sporting goods brand entered the first billion club for the first time, operating income of 11 billion 126 million yuan, net profit of 2 billion 40 million yuan, and growth of 24.7% and 20% respectively.

Several other local brands, though less sales than Lining, have far more net profits than Lining.

XTEP, 361 degree and PEAK revenue were 5 billion 295 million yuan, 4 billion 459 million yuan and 3 billion 110 million yuan respectively, with net profit of 478 million yuan, 518 million yuan and 390 million yuan respectively.

Large scale shop to return to the old road

Zhang Qing, a clothing expert, said that whether the garment enterprises can grasp the industry's warming up period to gain sustained profits and growth depends on the business operation ability of the enterprises and the specific reasons for their losses.

According to the 2015 financial report, after Lining's return, he reinvigorate the core product category, retrieve the core consumer audience, and increase the cost control.

Data show that in 2015, Lining's administrative expenditure dropped from 672 million yuan in 2014 to 346 million yuan, and the largest proportion of the cost reduction was travel and business entertainment and management consulting fees. The reduction of administrative costs was considered by the industry as an important reason for Lining's losses.

Although it turned out to be a failure in 2015, Lining seems to be returning to the old road of reopening the store expansion plan.

After the cold spell of recession, inventory crisis and large-scale closure, Lining's sales network is expanding again.

The Li Ning Co has taken a wait-and-see attitude towards the development plan of the 300-500 sales outlets this year.

Experts generally agree that it is not rational to start shop expansion plan in the current low consumption environment.

Lining's 2015 earnings report showed that by the end of last year, the sales of Lining's stores had increased from 507 to 6133, and this was the first time that Lining had expanded its sales network since the end of 2011.

Public information shows that in the past 2012-2014 years, Lining has closed 1821 stores, 519 houses and 289 stores respectively.

In addition, Lining's Internet strategy is also mediocre.

Now almost all clothing enterprises with a certain amount of clothing are trying out the Internet strategy, but Lining has not shown too many differences.

It is considered that whether the market antenna and market positioning have missed the market for several years, whether Lining can succeed in counterattack after losing the deficit remains to be seen.