China's Lining, Whose Store Efficiency Exceeds 600 Thousand / Month, Relies On "Chao Chao" And Earned 4.4 Billion In The First Half Of The 1990S.

The local sports brand leader Li Ning Co Ltd (hereinafter referred to as "Lining") has issued a performance notice recently. It is estimated that the net profit attributable to the parent company in the first half of 2019 will increase by 164% to 440 million yuan compared with the previous year, and the profit of the continuing business will increase by not less than 240 million yuan, an increase of 90% over the same period last year.

For the performance improvement during the reporting period, the Li Ning Co considers that there are several main reasons:

(1) compared with the same period last year, the increase in profits from continuing operations is no less than 240 million yuan or 90% yuan. The increase in net operating profit is due to the increase in revenue by more than 30% and the continuous improvement in operating margins.

(2) one-time non operating profit (mainly from investment income) is no less than RMB 200 million yuan, due to a large increase in non operating profits of affiliates and other non operating special projects.

Insiders said that Li Ning Co's transformation of its brand image and product design has proved to be well recognized by consumers, and the retail sales have increased strongly. It is expected that the "China Lining" brand will grow more strongly in the next few years, while the expansion of Lining's direct channel, electricity business, Lining Young brand and "China Lining" store will become the main engine of growth in the next few years.

Public information shows that Lining, one of the leading sports brand enterprises in China, mainly provides professional and leisure sports shoes, clothing, accessories and accessories products with Lining brand. The company has established a huge supply chain management system and retail distribution network in China. At present, the market share of Lining in China's sports footwear industry reaches 5.3%, lower than that of Anta 7.9%, and ranks second among domestic brands.

According to the results of the report, Lining's main sportswear and footwear products increased gradually in recent years. The proportion of clothing revenue reached 50.6% in 2018, and footwear income accounted for 43.8%. Meanwhile, the income of four core categories of basketball, running, training and sports fashion accounted for 25%, 25%, 22% and 25% respectively. The company's distribution structure: with the increase of self owned stores, the proportion of self retailing revenue rose from 12.8% in 2008 to 29.8% in 2018, and the proportion of distribution revenue decreased from 86.3% in 2008 to 46.7% in 2018. Besides, in recent years, the electricity business of the company has developed rapidly, and the income of 2018 channel has already accounted for 21.1% of the revenue, while the international market accounts for a relatively small proportion, maintaining around 2%.

Li Junsong, an analyst at Zhongtai securities, said that since 2012, Li Ning Co has begun to shut down inefficient shops and strictly store the profitability of the stores. It has increased the proportion of direct store stores through new ways of opening or rebuilding, and has opened large shops with high profit and experience concept. In 2018, the total number of stores reached 7137, but compared with the number of 10057 stores in Anta, there was still considerable opening space. Meanwhile, the proportion of Direct stores in the company increased from 9.8% in 2012 to 23.7% in 2018, ranking the first among the domestic sports brands.

In terms of retail operation, Li Ning Co has introduced professional retail talents, and through strengthening monthly / quarterly assessment and assessment, set up standardized single store ordering management tools, set up a commodity rapid response project team, and set up a long life cycle shop rolling shop platform based on best sellers, continuously improving the operation management and management efficiency of Direct stores. Meanwhile, direct store stores are 2 times the distribution of stores. The increase of Direct stores will also drive the improvement of company's operational efficiency. From the same store performance, we can see that the operation efficiency of the company's retail outlets has continued to rise, and the same store growth rate in 2018 has reached an average higher level in recent years.

Li Junsong believes that Li Ning Co has strengthened the management and support of distribution stores, granted dealers certain subsidy policies, encouraged dealers to increase store coverage through purchasing incentives, and applied operational experience accumulated by retail outlets to distribution channels. The profitability of distribution channels has been continuously improved. The average sales revenue of single outlets has risen from 659 thousand yuan in 2013 to 1 million 15 thousand yuan. From the same store growth rate, we can see that the efficiency of distribution channels has been continuously improved. In addition, with the recovery of the profitability of distributors, the company has raised the price of goods in 2019, so the gross profit margin is expected to further improve. At present, the number of Li Ning Co's distribution stores is 4838, which is lower than that of the 7495 stores in 2011.

What we need to see is that Li Ning Co's revenue growth comes from the expansion of the number of stores, the improvement of store operating efficiency and the increase of unit price. In terms of stores, the company's main brand is expected to increase by 100-200 in 2019, and Lining Young expects to open 300-400 new stores, and China's Lining stores are expected to reach 100 by the end of 2019. With the improvement of the operating efficiency of stores, it is expected that the stores will maintain double-digit same store growth rate. Li Junsong expects Li Ning Co's revenue in 2019 and 2020 to be 12 billion 360 million and 14 billion 190 million yuan respectively, up 17.6% and 14.8% respectively. The net interest rate of Li Ning Co has a larger room for improvement than other companies. With the increase of the proportion of Direct stores, the optimization of product structure and the improvement of supply chain efficiency, the profitability of the company will continue to improve.

Ju Xinghai, a researcher at Guosheng securities, introduced that Li Ning Co set up the children's wear field in 2017, launched the brand name of children's clothing Lining YOUNG, and launched the sports fashion brand "China Lining" in 2018, and diversified development around the brand. Ju Xinghai said that the significance of "China Lining" brand is not only in itself, but also in promoting the brand of Lining by combining fashion trends and marketing opportunities. Lining, China's main sports fashion, positioning high-end, brand name for the national tide. Compared to the main brand, its consumers are more youthful, mainly by the age of 18-25, and most of their stores are in a second tier city. By the end of 2018, the number of stores was more than 20. This category has been well received in the international fashion week. Its store performance level is higher than that of Lining's main brand, reaching 60-80 million / month.

Ju Xinghai believes that the growth of the number of new stores in the Li Ning Co will remain at a moderate level in the future. The focus of future operation will still focus on improving customer experience and building efficient stores, and the electricity supplier will continue to be a bright spot for growth in the future.