Chinese sports good retailer Li Ning has posted a net profit loss of 184 million yuan (around $30 million) in the six months to June due to the challenges facing China’s sports retail industry.
Revenue declined 24.6 per cent to 2.9 billion yuan, it says.
“China’s sports industry faces challenges including the hangover from over expansion, competition from casual wear and the need to meet the more sophisticated consumer tastes of rising China,” said founder and executive chairman Li Ning.
However, he is optimistic the transformation the company is undertaking will help it realise its vision.
“With a new CFO and chief human resources officer joining us in the first half of this year, our senior management is now fully in place. We have a first rate team with improved management systems and processes to unleash our full potential as we continue to execute against our strategic vision,” he said.
In the first half of this year, over 90 per cent of Li Ning’s distributors enrolled in the “channel revival plan”, resulting in over 30 per cent decrease in inventory value.
Most of the company’s channel partners have also experienced improved productivity and cash flow during the first half of the financial year.
It says its partnership with NBA star and three-time championship team player, Dwayne Wade, as well as the CBA sponsorship, have enhanced Li-Ning brand recognition and helped boost product sales.
During the first half, Li Ning closed approximately 400 underperforming stores and will continue to rationalise its store network.
“We will continue to move forward in executing the next phase of the “transformation plan” and look forward to seeing the value come from these investments,” said executive vice chairman Jin-Goon Kim.
Li Ning operates 6024 stores.