Li Ning Co'S Inventory Problems That Cause Losses Remain Unchanged.

Even in 2015, when the deficit was realized.

company

It remains at a high level of 960 million yuan, which means that the inventory problem that has caused losses to the company has not been eliminated.

Li Ning Co Ltd, which just lost its deficit in 2015, has to face the decline of the same store profitability in the first quarter of 2016, and the slowdown in the business of e-commerce.

In April 15th, the Li Ning Co issued the "latest order and operation status" notice. As of the first quarter of March 31, 2016, the sales of Lining's same store recorded a low digit growth rate, much lower than that of 2015, which means that the profitability of Lining's retail store has declined.

At the same time, as the development focus of the next few years, the electricity business has slowed down significantly in the first quarter of this year.

Lining business platform business grew by 60%-70%, but this has slowed down considerably compared with the growth of 95% over the previous year.

As of March 31, 2016, Lining

The total number of sales outlets in China totalling 6106, a 27 decrease from the end of last year.

Lining, founder and executive chairman of Lining group, said that considering the economic factors, Li Ning Co Ltd generally chose to close low profit sales outlets 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."

When China chain asked for interview needs on Li Ning Co's channels, operations and strategies, Lining's PR firm did not give a clear reply, but sent some information in the form of mail.

It is easy to find that Li Ning Co has realized losses in 2015, but there is still a way to go out of the difficulties of Li Ning Co.

Loss of gold content

Lining faced the problem of continuous losses in the past, the most direct performance is to digest high inventory.

Even in the 2015, Li Ning Co inventory remained at a high level of 960 million yuan, indicating that the inventory problem that had caused losses to the company remained unchanged.

According to public data, Lining's inventory reached 1 billion 133 million yuan in 2011, and its inventory remained above 900 million yuan.

Flush statistics show that from 2012 to 2014, Lining's inventory reached 920 million yuan, 942 million yuan and 1 billion 289 million yuan respectively.

In recent years, the highest inventory year is 2014. In 2014, when Lining cleared the inventory, Jin Zhenjun, executive vice president and deputy chief executive officer of the group, told the media that more than 1 years of inventory had been cleared and only about 20% remained.

But at the same time, it said that some of its distribution partners were weaker, accounting for about 10%, and they were not enough in coordination with the pformation.

Jin Zhenjun said that there are problems such as weak retail capacity, weak resources and insufficient coordination.

Therefore, Lining eliminated the dealers and increased the proportion of self operated stores.

Insiders analysis, Lining inventory increase shows that the company's sales are not very good.

Li Ning Co annual report 2015 shows that the company's annual revenue is 7 billion 89 million yuan, an increase of 17% over the same period, and the profit of equity holders should be 14 million 310 thousand yuan, and clothing and footwear businesses have achieved nearly 50% growth.

This is the first time Li Ning Co has turned a profit since 2012, but this figure is far from that of its competitors.

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Previously, according to Anta's 2015 earnings report, business income reached 11 billion 126 million yuan, net profit of 2 billion 40 million yuan, an increase of 24.7% and 20%, respectively. This is the first time China's local sporting goods brand has entered the 10 billion club.

In addition, although the sales of several local sports brands are less than that of Lining, the net profit is far more than that of Lining.

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

In 2010, Lining was the most prosperous period. His business income amounted to 9 billion 478 million yuan.

The sudden winter of 2011 caused a great blow to Lining. During the period from 2012 to 2014, Lining lost 1 billion 979 million yuan, 392 million yuan and 781 million yuan respectively, and accumulated a deficit of 3 billion 152 million yuan in three years.

Some analysts believe that the reasons for Li Ning Co's losses in 2015 are more complicated.

The person believes that Li Ning Co's 2015 earnings showed that its revenue was 7 billion 89 million yuan, an increase of 17% over the previous year, operating profit of 157 million yuan during the year, and a net profit of 14 million 309 thousand yuan at the same time.

Profits were only over ten million, while administrative expenditure in 2015 dropped from 627 million in 2014 to 346 million, a 281 million decrease.

It is mainly management consulting fees and travel and business entertainment expenses, and this part is not long-term sustainable profitability.

In addition, in October 2015, Li Ning Co announced that it would sell 10% of red double happiness and generate an income of about 125 million.

The sale of shares of red double happiness is net income, so the important part of Lining's earnings is also relying on equity income.

After Lining bought 57.5% of the red double happiness in 305 million in 2007, red double happiness indirectly became a wholly owned Affiliated Companies of Li Ningfei. After selling 10% stake in 2015, Li Ning Co is still the largest shareholder of red double happiness, but red double happiness will no longer be a subsidiary of Lining and will not be included in the consolidated financial statements.

Min Guangya, a retail expert, said Lining's losses now came mainly from the compression of internal costs and the loss of some of the losses. The reverse of store losses also came from shutting down some shops, indicating that the closed shops were invalid shops, which could further improve their profitability after shutting down.

In an interview with China chain, Zhu Qinghua, a researcher at CIC light industry, said that the root cause of Lining's continued losses was the ambiguity of positioning and price increase.

"In 2010, Li Ning Co launched the brand remolding plan, changing the brand name of Lining, positioning the consumer group as" post-90s ", and raising the price of products. The price range ranges from 7% to 17.9%, which has laid a big hidden danger for Lining's future development.

Future challenges

On the one hand, Li Ning Co must face internal management problems such as inventory and cost reduction, on the other hand, it must also face the squeeze from external competitors.

Over the past few years, the Li Ning Co has made drastic reforms.

Since 2012, Li Ning Co has pioneered the pformation from the traditional wholesale mode to the retail oriented rapid response business mode, and launched a "channel revival plan" with a cost of 1 billion 400 million -18 billion, which supports dealers to clean up inventory, buy back and integrate sales channels.

This change led to the loss of Li Ning Co for three years.

Lining pformation retail mode can optimize inventory allocation and operation efficiency, and also increase the proportion of retail revenue.

However, the retail mode exerts pressure on the company's capital expenditure, and the number of retail outlets increases, and the corresponding selling point rental costs, staff costs and so on increase, and terminal logistics costs also increase.

Compared with Anta's dealer mode, the sales cost is about two times that of the Anta's dealer mode, and it is also 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 the face of external competition, Zhu Qinghua believes that Lining's overall advantage is not obvious, and its competitiveness is relatively weak.

"Compared with Nike and Adi, Lining has the advantage of being more aware of the Chinese market and relatively low price. The main disadvantage is that the brand influence is relatively weak, and the R & D capability, quality and innovation ability of the products are not strong."

Zhu Qinghua said, "compared with XTEP and PEAK, the advantage of Lining is superior in quality and design. The main disadvantage is that the price is relatively high."

Although Li Ning Co is facing the challenge of continuous profitability, the helm of Lining did not stop because of difficulties, but chose to expand the layout development mode.

In the light of Zhu Qinghua, a researcher at CIC light industry, Lining has seen as many as more than 2300 stores in 2013-2014 years. When the market is getting warmer, Lining has begun to expand its stores.

Zhu Qinghua said that the current sports industry is affected by favorable policies and upgrading of consumption, and has entered a period of rapid development. Sporting goods, as an important subdivision of sports industry, will also expand its market demand.

Lining's expansion of stores during this period is conducive to the rapid development of sports industry dividends.

"While Lining is expanding the store, he needs to adjust the brand positioning, products and channels in time, otherwise it will be difficult to improve the attractiveness of consumers."

Min Guangya believes that the most important point for enterprises to turn losses into win is the sale of the shops themselves rather than the expansion of the shop scale.

Only by improving the profitability of the shops can we fundamentally reverse this loss situation. However, there is no logical relationship with the number of shops.

There is a premise that a large scale shop opens up the cost to raise the profit level. That is to say, every new shop must be profitable, otherwise the profitable shop can not only consume a lot of resources, but also expand the company's deficit situation as a whole.

Zhu Qinghua believes that sports products enterprises need to improve their R & D capability and enhance their creativity. They will win the market with products of high technology and diversification, and at the same time pay attention to the needs of consumers and upgrade products according to the needs of consumers.

In addition, actively develop online channels, so that online channels and offline channels to form a good cooperation, improve marketing capabilities.

"The more advantageous enterprises in the future will be enterprises with strong product, channel and operational competitiveness, which can meet the individual needs of consumers."

Zhu Qinghua said.