Li Ning personally in charge, seek "high inventory"

Li Ning personally in command

Li Ning’s announcement in the Hong Kong Stock Exchange stated that since July 4th, Zhang Zhiyong has retired as CEO of the company and no longer serves as a member of the executive committee of the board of directors on the same date. However, to ensure a smooth transition of the company’s management before the new CEO’s arrival, Zhang Zhiyong will continue to serve as an executive director of the group, acting as the chief advisor to the group’s executive committee, and may receive up to 3.7 million in consulting fees.

The announcement did not disclose the specific reasons why Zhang Zhiyong left office. “The board of directors and Mr. Zhang agreed that for the next stage of the development of the group, it is the right time to introduce a new management team.” It is understood that Zhang Zhiyong spent 20 years at Li Ning Corporation. Leading the 2009 Li Ning brand transformation strategy. According to public reports, Zhang Zhiyong, the then-CEO of Li Ning, reviewed his own mistakes in strategy development such as brand redevelopment and crowd positioning in his 2012 New Year speech.

Before the appointment of the new CEO, Li Ning, founder, executive chairman and director of Li Ning Company, played again and was mainly responsible for Li Ning's strategy, external affairs and relations. The new executive director and executive vice chairman Jin Zhen will be responsible for the internal affairs and operations of the group. In addition, Su Jingyi, Chairman and Chief Executive Officer of Yum! Brands China Group, has also become an independent non-executive director of the Li Ning Group.

People in the industry believe that the restructuring of high-level organizations is the action taken by Li Ning to build a world-class brand. In a certain period, for the long-term development of the company, the company’s board of directors to adjust the management structure or introduce a new management team at an appropriate time is one of the important means of self-reform, which is represented by Lenovo Group, another Chinese national brand. It is particularly evident on the body.

Resolving inventory is a priority

In the past few years, Li Ning has been slow to develop, faced with problems such as weak order growth, high inventory levels, and internal management confusion.

Li Ning was faced with a good situation after the Olympic Games, but he targeted the target market in the “post-90s” group and lost the favor of middle-aged people who were originally major consumer groups. According to public information, Li Ning’s profits were exceeded by Anta in 2010; Li Ning had announced that it had rolled out an inventory repurchase of 300 million yuan in 2011, with an increase of 40% in inventory and an annual net profit of only 386 million yuan, a drop of 65%. At that time, Li Ning's share price also fell 61%. In June of this year, Li Ning announced the ordering situation for the whole year of 2012. The annual new product ordering meeting will be reduced from the high single-digit percentage of last year.

“Our sales in this store were not very satisfactory this year, and the income dropped significantly.” The staff of a Li Ning store in Banan District told reporters in an interview yesterday. “Not just our family, the sales of sports brand clothing nearby are not good, I think it is not optimistic that the sporting goods industry is currently in the market.”

Yesterday, Jinzhen Jun revealed to the media that the company is now in a difficult period of adjustment. After a period of rapid expansion and development of the sports industry in the past few years, it is the company's "immediately pressing problem." Li Wei, a staff member of Public Relations Department of Li Ning, confirmed to the reporter that there is no clear timetable for resolving the inventory issue and it is expected to improve during the current year.

Goldman Sachs also pointed out in the report that the focus of the market has shifted to the development of casual wear, which poses challenges to the sporting goods industry in the Mainland, and in particular to those operating sportswear. And, "Li Ning needs time to restructure its brand image and reverse the current business losses. It is expected that the company will not make positive profit contributions in the short term."

Improvements in the next three phases

Not long ago, Li Ning Group was questioned by various organizations for sponsoring the (China Men's Basketball Professional League) CBA and shortening the concession period of the Italian brand Lotto. In the announcement yesterday, Li Ning issued an improvement plan that was implemented in three phases. It also explained the previous agency's doubts about Li Ning.

Jin Zhenjun revealed to the media yesterday that Li Ning’s performance this year is not pretty on the surface, but this is an initiative made by the company for the future development, and boldly put in some costs, including sponsoring the CBA.

According to reports, Li Ning's first phase of short-term measures has begun to implement, including focusing on retail terminal sales and channel inventory clearance, improving the cost structure of products and operations, focusing on the domestic market and core products. "Li Ning will invest more in core products and business, and it does not mean that it will change the previous horizontal multi-brand strategy." Li Wei told reporters.

The second phase will improve supply chain management, marketing and product planning models, and provide more first-class products and customer experience. The third phase will ensure that the Group has the right business model to achieve the goals of improving profit structure and channel, retail efficiency, cash and return on investment.

“The announcement we issued today is that the Board of Directors and the management have listened carefully to the views of various parties inside and outside the company for several months. After assessing the company’s current business situation, it includes the internal and external challenges we face and considering the future of the company. Long-term outlook, and the results of efforts to achieve." Li Ning said. In view of the development of domestic domestic sports brands, Li Ning believes that there is still vast space.

In addition, yesterday, when a reporter asked the head of Li Ning’s Chongqing office about the operation of the Li Ning store in the Chongqing area and whether the layout of the Chongqing market would be adjusted, the responsible person said that he had no instructions from the company and was not convenient to disclose to the media.

expert's point

Li Ning can be a two-pronged approach

Many people in the industry have publicly stated that the three-phase plan adopted by Li Ning is at the heart of the matter. If it can be implemented thoroughly, it is expected that Li Ning will be back on a good track of operations.

Sports brand expert Zhang Qing once worked for Li Ning, and he admitted that Zhang Zhiyong had a glorious past in Li Ning, but the failure of the strategic transformation made Li Ning not recover. Zhang Qing believes that Li Ning’s three-phase plan can consider both approaches. On the one hand, we must focus on basic, even more pragmatic, measures that are directly related to business. On the other hand, we must also consider that Li Ning is a brand company after all. The fuzzy swaying strategy will certainly not work. Past brand remodeling practice proves that it is not. Successful, so you need to have a successful strategy on the brand side.