Li Ning develops bottleneck and renews performance warning

After a negative growth of 5.2% in revenue in last year's annual report, Li Ning issued a performance warning notice in recent days. The announcement shows that the company’s annual orders fell sharply, coupled with a significant increase in brand marketing and promotion fees, impairment of intangible assets and payment of interest on convertible bonds, etc. It is expected that the profit for the first half of this year and the full year will fall sharply.

After a negative growth of 5.2% in revenue in last year's annual report, Li Ning issued a performance warning notice in recent days. The announcement shows that the company’s annual orders fell sharply, coupled with a significant increase in brand marketing and promotion fees, impairment of intangible assets and payment of interest on convertible bonds, etc. It is expected that the profit for the first half of this year and the full year will fall sharply. Under such a market background, after the golden period of average annual growth rate of more than 30% in previous years, the Chinese sportswear brand may have entered the adjustment period.

Li Ning: Reform is constrained by the environment

Li Ning announced yesterday that in order to cope with the harsh environment of the industry and avoid new pressure on the retail side, the Group has taken the initiative to communicate with the distributors and control the order arrangement. Therefore, the order amount in the fourth quarter of 2012 was further higher than the same period of last year. cut back. At the same time, Li Ning is also constantly advancing the reform of the channel system. It is understood that on the basis of regional adjustments, Li Ning launched channel optimization adjustments, and some distributors with fewer stores and smaller business area were merged by higher-level distributors. As of the first half of last year, Li Ning has completed the integration of 256 inefficient single store distributors.

However, the reporter also learned that Li Ning's handling of inventory issues was based on a recycling method. It did not allow distributors to discount it. In 2011 alone, Li Ning invested approximately RMB 300 million in recycling. "Every 60%-75% of the new goods are bought back through inventory, leaving room for new goods," said Li Ning. The person told reporters that Li Ning's reason for doing this was to ensure that dealers with better profitability and high operating efficiency had sufficient funds to enter new products. “We don’t cut prices, and constantly introduce new ones, so Li Ning’s gross margins will continue to lead and the brand image will not be compromised.”

In addition, in order to control costs, in early February of this year, Li Ning announced the layoffs, the company made organizational structure optimization and personnel adjustments, intends to reduce the proportion of labor costs by 0.5 percentage points. The layoffs even touched the company's senior staff: chief marketing officer and brand marketing director, interactive marketing director, etc. have all been "departed." Li Ning Company expects that under the increasingly fierce competition in the sporting goods industry, and under the background of further expansion of sales promotion efforts, the pressure of destocking at the retail end will remain severe. The decline in orders will be unavoidable in the short term, and the results of reforms will not be apparent until the very near future.

Industry: Blind expansion of excess investment

In fact, Li Ning is only a microcosm of the bottleneck in the development of the local sporting goods industry. The annual report published last year by major sporting goods brands has become a clue. Although sales of several major sportswear brands, including Anta, Sanliudu, Peak, Xtep, etc., have increased year-on-year, the growth rate has dropped from 20% or even 30% in previous years to 20%. Within %. To this end, Zhang Qing, the CEO of Key Road Sports Consulting Co., Ltd., said in an interview with the China Daily News that the domestic sportswear industry is experiencing problems and that the uncontrolled "investment surplus" is the most direct trigger.

Due to the rapid development of the industry in the past few years, companies generally over-optimistic expectations of the market, the industry over-investment, product oversupply. “The sports industry is a futures system. Businesses are critical to the judgment of the future market. If you increase expectations, increase production, and ultimately expand sales, you can't keep up with the final sales. The decline and adjustment period will follow.” Indicated.

Chairman of the Board of Directors and CEO of Anta Sports Ding Shizhong has publicly stated that in the next six months to one year, the industry situation is not optimistic.

“At the ordering meeting held in May this year, ANTA's orders for the fourth quarter of 2012 had a double-digit decline, and the total order volume for the annual sales fair recorded a year-on-year decrease in high single-digit percentages.” National Sports General Administration Sports Equipment Ma Jilong, director of the equipment center, also pointed out that the main reason for the current slump in the sporting goods industry is that the rapid development in previous years is a compensation for the industry's inherent deficiencies, but now there are excessive signs of compensation. “According to the data I have, the number of stores closed by some companies in 2011 exceeded 1,000. The other reason is that the number of terminal stores is too large, companies are competing for discounts in the process of destocking, and the overall market is depressed.”

In addition, the reporter also learned that due to the low brand loyalty of domestic consumers, especially in second-tier and third-tier cities, Nike and Adidas have adjusted their own development strategies in recent years to carry out brand marketing, and various low-priced products have been launched in succession. Domestic domestic brands have brought great impact.

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