In The First Quarter, The Performance Of Lining Dropped By Nearly 30%, And 224 Stores Also Used The "Three Growth" To Maintain Growth.

Li Ning Co Ltd (hereinafter referred to as "Lining") recently released the first quarter results in 2020. During the reporting period, the sales volume of Lining sales point (excluding Lining YOUNG) showed a decline of 10%-20%.

In terms of channel, offline (including retail and wholesale) got a decline in 20%-30%. Among them, the retail channel showed a substantial decline in 30%-40%, the wholesale channel showed a decline in 10%-20%, and e-commerce showed a low growth rate of 10%-20%.

By the end of March, in the Chinese market, the number of Lining sales points (excluding Lining YOUNG) reached 6225, representing a decrease of 224 compared with the beginning of the year. In these 224 sales outlets, the retail business decreased by 26 and the wholesale business decreased by 198. On the Chinese market, the number of sales outlets of Lining YOUNG totaled 1026, with a net reduction of 75 so far this year.

Affected by the epidemic, orders for the fourth quarter (excluding Chinese Lining and Lining YOUNG) will be delayed until mid late 4.

Changjiang Securities researcher Yu Xuhui believes that at present, the growth rate of local clothing brand sales has slowed down or even slowed down, which is mainly affected by the temporary logistical suspension and outgoing activities during the epidemic. However, in the context of the increasing discount of all sports brands and the reduction of the average transaction price, the average transaction price of the whole industry still keeps double-digit growth, even faster than the ring, or is mainly affected by the competition pattern. Changes, high price brand sales accounted for the driving force.

Guoxin Securities analyst Wang Xueheng also said before that, affected by the epidemic, the first quarter of Li Ning Co's offline sales is expected to decline between 20%-25%, of which direct channel water flow is similar to the decline, wholesale channel is expected to have a decline of about 15%. In the first quarter, the company's sales growth continued strong momentum in January, mainly in February, which has been greatly affected. At present, there is a marked improvement in the sales link in March. It is expected that in the first half of March, the volume of water in the first half of February dropped by about 40%, and that in the second half of the month dropped by about 20%.

Next, the epidemic continues to show a good trend of control. It is estimated that the Li Ning Co will be able to recover 9 in May, and will continue to improve in June and the second half of the year. Based on the above judgment, Wang Xueheng believes that the Li Ning Co is expected to achieve a flat or low unit income in the first half of the year, and that the growth target of the company before the epidemic is high double digits. Therefore, it is expected that the second half of Li Ning Co is expected to resume a relatively fast growth, so that the annual revenue of the company can still achieve positive growth over the same period.

First textile network reporter learned here that, benefiting from the improvement of channel profitability, brand upgrading, product pricing adjustment and group operation efficiency improvement, Li Ning Co has significantly improved its operating margins since 2018. In 2019, Li Ning Co achieved the target of increasing profit margin beyond the net profit rate of 9.1%. Li Ning Co is confident that it will continue to do so on this basis. The target of net interest rate raising is to achieve net interest rate of 10%-10.5%, which shows that the strong momentum of corporate earnings recovery can cope with the adverse effects of short-term epidemics.

Wang Xueheng believes that the confidence of Li Ning Co's profitability comes from several aspects:

1, higher new product sales ratio, better full price sales rate and less retail discount will bring back the profitability of terminal channel, directly increase the profit margin of the company's direct business, and indirectly transfer the profit margin from wholesalers to distributors.

2, fast operating capital turnover, healthy inventory and accounts receivable, reduce the pressure of provision for impairment. At present, Lining's inventory and company accounts receivable below 6 months of goods structure has reached over 70% levels, at the best level in history.

3, brand upgrade, higher tag price and increase rate, enhance profit margins. It is expected that in 2019, the growth of 26% of the company's offline sales will be driven by low double-digit price growth and the driving force of 15%.

4, under the strong scale growth momentum, Li Ning Co has the ability to further optimize the cost structure, share the fixed expenditure ratio, and leverage the leverage effect.

In view of this, after the outbreak of the epidemic, in the resumption of the business track and further optimization, Li Ning Co still has the potential to increase profits to achieve rapid growth in profits.

Financial reports also showed that with the continuous innovation of products and dynamic optimization of channels, the brand DNA gradually strengthened. In 2019, Li Ning Co's overall performance was dazzling. During the reporting period, the company achieved operating income of 13 billion 870 million yuan, an increase of 32% over the same period, and a gross profit of 6 billion 810 million yuan, an increase of 34.7% over the same period last year. Operating profit of 1 billion 540 million yuan, an increase of 98.6% over the same period, net profit of 1 billion 499 million yuan, an increase of 109.6% over the same period last year.

Yu Xuhui, a researcher at Changjiang Securities, pointed out that since the end of January, the impact of the new crown epidemic on physical clothing, pedestrian flow and logistics pause has been significantly affected by clothing consumption. Brand clothing companies have stepped up online channel development and new retail layout to make up for offline retail sales. But from the sales data, different clothing categories and different brands show obvious differentiation. Amoy data show that the first quarter of the Ali market (including Taobao and Tmall) ten clothing bags category, only sportswear sales category maintained a positive growth, the rest of the categories have declined. From the perspective of Tmall, except for sportswear and sports shoes, 41% and 19% of the sports shoes were increased by the same period, the rest of the products also declined, but the decline was narrowed compared with that of the Ali market.

According to Xu Hui, both the online and offline sports shoes and shoes are the most popular thin plate in the footwear industry, which is superior to other categories. With the industrial chain and logistics resumption, the growth rate has significantly recovered. During the epidemic period, the online footwear industry showed a high price share of the brand market share, a higher level of competition with the offline competition, and a better performance of the international brand. This shows that the competitive pattern of sports shoes and clothing is stable and continuous optimization, and brand strength will continue to be the strategic force of the future local brands, and how to make products, technology, marketing resources and so on. Strengthening competitiveness and narrowing the gap with international brands will become a long-term consideration. It is expected that sales growth of local brands is expected to recover as inventory goes on and the discount rate returns to normal.