Loss 3 Billion 152 Million To Profit 200 Million, "Lining, Anything Is Possible".

Lining (2331-HK) landed in the 2019 autumn and winter fashion week in New York, the second time since last year's debut as the first Chinese sports brand after landing in New York fashion week.

The success of the Lining fashion week Series in 2018 marked a long 10 years from peak to trough and gradual recovery.

After 10 years of turmoil, Lining began to win the market recognition with a brand new image.

In the past ten years, Lining has seen from everyone's attention to the peak of record performance, to the international layout, to the replacement of LOGO and slogans. It has undergone the episode of tight revenue, industry crisis, huge losses, founder's return and profit making.

During the period, Lining's peak revenue was 9 billion 455 million yuan, only one step away from the billion. When the trough was low, it dropped to 5 billion 218 million, which was nearly 45% higher than the peak.

The most frightening point is that the difference between these two extremes is only 3 years scale.

Ten years of joy, ten years of worry.

1. gold for ten years

2001 -2010 is the golden year of sports brand horse racing enclosure. Ten years.

During this period, the industry ushered in rapid development. With the help of the Olympic Games, Lining brand reached its peak in 10 years.

Lining expanded the brand influence through the signing of international competition cooperation, expanded the brand rapidly, expanded from 1985 in 2003 to 7915 stores in 2010; in 2004, Lining successfully listed in Hongkong and became the first domestic sports brand to be listed; in 2008, the sales growth rate of the sports footwear industry reached 32.94%, while in 2009, Lining surpassed the second ranked Adidas in the Chinese market by 8 billion 387 million yuan in revenue, becoming the second largest brand after Nike, and was firmly in the leading position of the domestic sports brand.

During this period, Lining's net profit CAGR (compound annual growth rate) reached 41%.

It is worth mentioning that the 2008 Olympic Games painted Lining with a lot of gold.

The "Prince of gymnastics", known as Lining himself, lit the torch at the moment, which is a worldwide marketing campaign for the sports platform.

Affected by the time limit, the number of agents at that time was large, and the rent was cheap. As long as the shop opened, it would make money, so the brands expanded.

With the support of advertising marketing and Olympic Games, consumer enthusiasm is rising.

In 2001, Li Ning Co started with 734 million revenue and went all the way forward.

In 2003, revenue exceeded 1 billion, broke through 2 billion in 2005, broke through 3 billion in 2006, broke through 6 billion in 2008, and broke through 8 billion in 2009.

The peak road of ten years confirmed Lining's rapid development, but experienced a low ebb. It also witnessed Lining's anxiety.

2. low anxiety

Due to the blind expansion of domestic sports brands, the outbreak of inventory crisis in 2012 led to the closing of stores and the industry entered a downturn adjustment period.

The performance of sports brand in China has a negative growth, and the industry has entered a period of adjustment downturn.

From 2012 to 2014, Lining lost 3 billion 152 million yuan in three years.

European and international data show that in 2012 and 2013, the growth rate of sports footwear industry in China was negative, -1.8% and -3.3% respectively, and the industry continued to slump.

From the performance point of view, in 2011, Lining sports began to decline, business continued to decline, shares fell 16%.

In the context of the industry's hard going inventory, Lining sports ushered in its first loss since 1990, with a loss of 1 billion 979 million and a 24.55% year-on-year decline in revenue from 2012.

Second, industry inventories reached a high level in 2014, and Lining's inventory was 1 billion 289 million yuan in 2014, accounting for 19% of its revenues.

From the store's view, the number of stores in the industry began to shrink from 2012, and Lining's main brand stores were reduced from 11 stores to 8255 stores in 2015. The crisis caused by inventory crisis has seriously affected Lining's performance.

This period is a time to stir up the brand crisis.

Many sports brands declared bankruptcy because they could not support it.

For example, Quanzhou globe is still carrying 85 million 356 thousand yuan of bank loans when it was bought by Anta.

In order to clean up inventory, the surviving brands discounted the products through discount stores, and Lining cleaned up the inventory with 1 billion 800 million yuan.

Inventory backlog and survival pressure directly lead to sports brand choosing to sell at a very low price. This measure has seriously damaged the image and positioning of the brand. In addition, Putian's high imitation shoes are operating at the low price in the e-commerce website, and the domestic sports brand has ushered in the biggest threat.

In addition, there are serious problems inside Lining.

3. market strategy imbalance

1. positioning errors

Lining reshaped the brand in 2010, positioning the "post-90s" generation of young consumer groups, but the younger generation of consumers did not have a strong sense of identity for the Lining brand, and the old customers of the company could not adapt to the changes in the brand and product, resulting in Lining's terminal sales not satisfactory, and the performance declined rapidly.

2. pricing mistakes

After 2008, Lining promoted the brand image and improved the product price, and lost the advantage of cost performance, resulting in the loss of consumers.

As a result, when the price is comparable to that of foreign brands, the old customers who are older and pay attention to cost performance will be largely lost to other low-cost domestic brands.

3. failure of reform

Zhang Zhiyong's PPT project ended in no way, and led to internal infighting. Lining changed Jin Zhenjun. Although he did not change Lining's dilemma, he laid the foundation for further reform of the company.

Lining trusteesed the company to TPG, and after the Koreans took over, a series of "acclimatized" reforms failed.

But all this started in 2015.

2015 is the twenty-fifth year of Lining's establishment. For Lining, this year is a geomantic omen.

All negative emotions began to change in the year.

In 2015, when Lining returned, the company gradually went out of the trough and began to recover.

After the turmoil and change, the year turned into a deficit, and its revenue growth increased from 3.6% in 2014 to 17.23%, and net profit was 14 million 300 thousand.

As of 2018H1, Lining achieved a revenue of 4 billion 713 million yuan, an increase of 18% over the same period, and a net profit of 269 million yuan, an increase of 42.33% over the same period last year.

In the same year, Lining returned to the company as CEO and restarted the slogan of "everything is possible", and the road of pformation is open at the same time.

Revitalize brand

In October 18, 2016, Li Ning Co announced that it had obtained the exclusive right to operate Danskin in mainland China and Macao.

In 1980s, Danskin remained the top of the list of women's tights in the United States for ten years.

Lining's move is undoubtedly aimed at opening up the market for women's sports. This is also the potential market for all major brands in active layout.

In addition, children's clothing was also Lining's income.

Lining sports announced the withdrawal of Lining KIDS authorization, the introduction of self brand Lining YOUNG.

In the first half of 2017, Lining YOUNG opened about 20 outlets in 14 provinces and concentrated in the northern region, adding 70 stores in the second half of the year.

Seize the pain of market to products

Li Ning Co promotes the interaction between brands and consumers through sports events.

After becoming the official partner of the Rockets, Lining Basketball Academy was launched to complete the overall layout of the youth basketball training program.

At the same time, the company continues to dedicate its best products to the 14-28 year old main basketball consumer group for the growing market.

Layout of channels

The number of stores in Lining began to increase in 2015, the first expansion since 2011, and 507 online stores, reaching 6133. Online: Lining has focused on the development of e-commerce channels, and the proportion of electricity supplier income has reached 8.6% in 2015. Compared with 2014, it has increased 3.7pct and achieved double-digit growth. In the first half of 2018, the income of e-commerce channels increased by 2.6pct compared with the same period, reaching 22%.

Cash flow has witnessed changes.

The net cash flow generated by business activities is negative and positive.

In 2015, the net cash flow generated by Lining's business activities reached 687 million yuan, which turned to be positive compared to the -3.94 billion in 14 years, and the cash flow continued to improve.

As of the first half of 2018, the net cash flow generated by Lining's business activities reached 660 million yuan, an increase of 12% compared to 589 million yuan in the same period of 17 years.