Domestic Brand Li Ning Once Again Hand In A Report Card Of Performance Growth

Taking advantage of "national trend", domestic sports brand Li Ning once again handed over a performance growth report card.

Recently, Li Ning (02331. HK) disclosed the first quarter's operation. According to the sales points put into operation at the beginning of the same quarter last year (excluding Li Ning young), as of March 31, 2022, the same store sales of Li Ning achieved an annual growth of 20% - 30%; The retail turnover of the whole platform increased by 20% - 30% year on year.

"In the era of the rise of domestic brands, Li Ning has a natural national brand gene, can eat more dividends." On April 22, tangxiaotang, an independent analyst in the fashion industry of no agency, told the times weekly.

In the past few years, relying on the two consumption trends of sports fashion and national fashion, Li Ning has gradually walked out of the crisis and reached a new height in performance. But what can not be ignored is that Li Ning and the whole domestic sports shoes and clothing industry are on the way to rise, relying on the national tide is far from enough.

"The national tide wind will gradually fade." Tang Xiaotang said frankly that the consumption trend is a dynamic change process, which will be changed by the influence of consumer psychology, habits and even social development. Enterprises still have to strengthen their product power and brand power, keep up with the change of consumption trend, and let consumers pay the bill.

The winner of the national trend

In the past two years, the rise of domestic sports brands has caught up with "favorable timing, favorable location and harmonious people". On the one hand, consumers' admiration for the concept of health, on the other hand, the strengthening of cultural confidence, domestic mature supply chain support, and effective marketing and channels have brought growth to domestic sports brands.

In 2021, the performance of several domestic sports brands will break out. Among them, Li Ning's revenue exceeded 20 billion yuan for the first time, which was 22.57 billion yuan, with a year-on-year increase of 56%, which was also the fastest year of revenue growth since the company was listed. In terms of net profit, the net profit of Li Ning will reach 4 billion yuan in 2021, with a year-on-year increase of 136%.

Compared with other domestic sports enterprises, Li Ning's revenue and net profit grew fastest. According to the statistics of Dongxing securities, in 2021, the net profits of Li Ning, Anta, Tebu and 361 degree will increase by 136%, 49.6%, 77% and 45% respectively.

"This has something to do with Li Ning's national trend, as well as the disruption of the supply chain of international brands and the shift of consumers' consumption to Li Ning." April 23, clothing industry analyst Ma Gang told time weekly.

From Tang Xiaotang's point of view, from the perspective of Chinese sports spirit, Li Ning has a natural national brand attribute, and taking the national trend route can achieve twice the result with half the effort.

However, Li Ning's management is generally cautious about its outlook for 2022.

At the performance presentation meeting on March 18, Zeng Huafeng, chief financial officer of Li Ning, said that looking forward, geopolitical uncertainty and the epidemic situation are not stable. In addition, there is also the pressure of supply chain challenges on cost. Therefore, the company should maintain prudence and conservatism. The revenue guidance for 2022 is expected to be close to 20%, and the net profit margin is expected to be close to 20%.

In addition to the uncertain impact of the epidemic situation, the Winter Olympics, national tide and other favorable factors can not always maintain a high fever. Whether it is Li Ning or other domestic sports brands, it is difficult to maintain the high growth in 2021.

Ma Gang said that Li Ning needs to find more growth points, and the development of the enterprise needs to keep pace with changes in the outside world.

Sprint to the middle and high end market

"Selling more expensive" has become another important growth strategy of Li Ning.

In 2018, the brand-new sub brand "China Li Ning" launched by Li Ning is a sports trend route, and its price is much higher than that of Li Ning brand. Some data show that the average hanging price of "China Li Ning" is 700-800 yuan.

The high terminal brand has brought about price increase, and Li Ning's gross profit margin has also increased significantly. From 2017 to 2021, Li Ning's gross profit rate increased from 47.1% to 53%.

In addition, due to the decrease in the proportion of staff expenditure, advertising and marketing expenditure and R & D expenditure in revenue, the net interest rate of Li Ning will reach 17.8% in 2021, an increase of 6% over the same period of last year.

In 2021, Li Ning launched li-ning1990, an advanced sports fashion product line, with a higher price.

The lowest price of "Ning's flagship store in 1990" was "Ning's flagship store" with the highest price of a pair of "Ning's long socks" in 1990. The general price of goods on sale in shops is more than 1000 yuan.

"Taking the middle and high-end route is the common choice of all sports brands." Tang Xiaotang said that when an enterprise launches a high-end product line, it does not necessarily need to rely on this product line to make profits. High end products can improve the image of products, drive the main price to sell products better, and thus can make more profits. "Li Ning's low price products are not in the minority." Said tangxiaotang.

The decline in the growth rate of international brands in China also gives domestic brands the opportunity to rise in the middle and high-end market. Ma Gang believes that it is an inevitable trend for domestic products to take the market with high prices.

Domestic brands have begun to compete in the high-end market. Li Ning launched a high-end product line, Anta has acquired one after another of the international brands whose price is much higher than its main brand, and even Tebu has launched a series of 1000 yuan shoes.

The challenge will be more intense

But if consumers want to pay for high price products, product power and brand power are the top priority. Especially for the "single brand" strategy of Li Ning, the challenge will be more intense. There are close competitors in the low, medium and high-end product segments. Both the product strength and the brand strength need to be more stable.

In 2021, Li Ning invited Xiao Zhan, a traffic star, to speak for him. At the same time, the expenditure on advertising and marketing reached 1.779 billion yuan, an increase of nearly 500 million yuan compared with 1.279.5 billion yuan in 2020.

Li Ning's R & D expenditure increased by 28.2% to 414 million yuan from 323 million yuan in the previous year, but the proportion of R & D expenditure decreased from 2.2% in 2020 to 1.8%.

Industry analysis shows that compared with international brands such as Adidas and Nike, domestic sports brands still have more space to catch up with in R & D and innovation.

Ma Gang bluntly said: "in the past few years, Li Ning's channels and products have improved rapidly, but there is still a bit of unsound."

"In terms of building core brand products, Li Ning company has continued to focus on the five core categories of running, basketball, sports life, fitness and badminton, adhering to sports technology innovation, committed to professional product research and development, and constantly strengthening the brand sports gene." At the performance meeting on March 18, Qianwei, CO chief executive of Li Ning company, said that he continued to express his understanding of Chinese culture and sports trends from a sports perspective, bringing consumers a more diversified sports lifestyle.