Lining: The 3 Year Recovery Plan Has Not Been Carried Out.

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The company's financial results in 2015 achieved a turnaround, but there is still a way to go.

According to Lining's recent quarterly earnings report, Lining

The same store sales achieved low single digit growth, far below the 2015 expectations for post recovery development.

Even the business, which has long been known as an online growth of 90%, has shrunk to 60%-70%.

After 3 years of recovery and adjustment, the loss hat on Lining's head was finally picked up in 2015. At this critical moment of development, Lining once again launched the "open shop enclosure" mode. Will it encounter the "old pain" of expansion?

"The 3 year recovery plan has not been carried out."

While investors were celebrating Lining's performance, he did not expect Li Ning Co's quarterly earnings in 2016 to sink into a deep reflection again.

Lining's quarterly results show that the same store sales have only achieved low single digit growth, far below the 2015 expectations for post recovery development.

According to the earnings data, Lining business platform business grew by 60%-70%, which has slowed sharply compared with the growth of 95% over the previous year.

In April 22nd, Li Ning Co stakeholders said that this year's quarterly earnings growth and the annual growth in 2015 were all low. The data of the two groups were consistent, while the same store sales situation was in line with the company's expectations for growth.

But for electronic business below the previous growth rate, it can be said to be roughly flat.

Lining, who has been watching the industry for a long time, told reporters that in fact, Lining's performance slowed down again because of the old problem.

"Although Lining has undergone 3 years of reform, the key pformation of the retail mode has been comprehensively optimized.

The allocation and operation efficiency also raise the proportion of the retail revenue of the company.

But because of Lining's conservative measures, the retail mode finally exerted pressure on the company's capital expenditure.

The number of retail outlets increases, and the corresponding sales point rental costs, staff costs and so on increase, and terminal logistics costs also increase.

These people said.

According to the reporter's understanding, Lining's model is about two times the sales cost of Anta's dealership, and it is about two times the average of the industry.

Although Lining has made great efforts to control costs in recent years, the reduction of sales costs is more difficult.

In fact, Lining has also stressed the importance of product, channel and operational capability in the recent earnings briefing, which is the key to turning losses into profits.

In addition, another person close to Lining told reporters that this phenomenon is the final result of Lining's 3 year recovery plan.

According to previous relevant information, since 2012, Li Ning Co has been the first to start from the traditional wholesale mode to retail oriented rapid response business mode pformation, launched a "1 billion 400 million -18 billion" channel revival plan, to support dealers to clean up inventory, buy back, integrate sales channels.

Earlier media reports said that from the point of view of building a professional retail system, Lining's "channel revival plan" had only been completed 30% before, and it can not be ignored that inventory remained at a high level of 960 million yuan in 2015. The hidden worries of high inventory remain unchanged. Sustained high speed profit is facing great challenges.

Lining's comprehensive balance sheet in 2015 annual report shows that as of December 31, 2015, the company's inventory was 960 million yuan, and in addition, the company's inventory in 2014 was 1 billion 289 million yuan.

These people are blunt, that is to say, although Lining realized losses in 2015, the inventory problem that had brought losses to the company still existed.

For the current inventory problem, the above Li Ning Co stakeholders only said that the inventory structure optimization in 2015 laid the foundation for the next development.

In addition, the industry did not respond directly to its doubts about the progress of its 3 year channel revival plan. It did not respond directly, but said it would continue to improve the efficiency and profitability of the existing sales outlets in 2016, and continuously optimize the sales channel network.

Profitability is far less than peers.

Although Lining has once again fallen into the situation of internal and external troubles, Lining, who steered the Lining brand to glory, has not been complacent because of this predicament. Instead, he chose the previous expansion layout development mode and continued to expand the sports market.

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

Earlier on the development plan for 2016, Lining said the sales network expanded gradually after the Spring Festival holiday.

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Although the recent earnings data show that 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.

But the pace of Lining's continued expansion is far faster than the current adjustment.

In fact, Lining's practice of continuous expansion began in 2015.

Lining's 2015 earnings data show that as of the end of last year, the sales of Lining's stores increased by 507 to 6133, which is the first time since Lining announced the closing strategy at 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 response, insiders said that in fact, Lining is in a very awkward period. The internal reform is not complete, the company's profitability is far less than peers, and the external environment is not optimistic, and the sports brand competition in the domestic market is also fierce.

Compared with many sports brand revenue and net profit, Lining's earnings were far worse than those of XTEP, PEAK and 31st degree in 2015.

In the past two years, the background of increasing worries and foreign aggression, by the end of 2014, "little brother" Anta has gone beyond the old "big brother" Lining, successfully sat on the Chinese sports industry.

Data show that Lining's revenue in 2015 was 7 billion 89 million, but Lining's net profit was only 14 million, while XTEP sold 5 billion 295 million, but its net profit was 623 million. In 2015, sales in 2015 reached 4 billion 459 million, and net profit reached 517 million, compared with PEAK, which had a minimum sales volume of only 3 billion 110 million, net profit also reached 392 million, not to mention Anta currently ranking, and its revenue was 11 billion 126 million in 2015, and its net profit was as high as 2 billion 40 million.

"In the face of internal and external troubles, Lining's best approach should be to improve the storefront's operational capacity and profitability, rather than regain the expansion and eventually lead to big but not strong."

An industry marketing veteran analysis said, because the company's profitability and the number of shops does not necessarily have a logical relationship.

Lining can only improve the profitability of the shop itself in order to fundamentally reverse this loss situation.

These people say frankly that the way to raise profit level through large scale shops to raise their profit level is to have a premise. That is, every new shop is to be profitable. Otherwise, shops that fail to generate profits will expand their losses on the whole while consuming a lot of resources.

Lining will continue to pay attention to how to fight hard battle in 2016.