Li Ning is a Chinese gymnast and entrepreneur. In 1982, he won six of the seven medals awarded at the Sixth World Cup Gymnastic Competition, earning him the title "Prince of Gymnastics", and is most famous for winning 6 medals at the 1984 Summer Olympics, the first Olympics in which China participated. Li retired from sporting competition in 1988, and in 1990 he founded Li-Ning Company Ltd, which sells footwear and sporting apparel in China. Li remains chairman of the company's board of directors.
Li Ning falls on warning of big full-year losses
Sportswear retailer Li Ning fell more than 5 per cent yesterday after forecasting a large full-year loss and announcing a 1.8 billion yuan (HK$2.2 billion) plan to restructure sales channels.
The Beijing-based company said in a filing yesterday that the profit this year would "have a rather substantial decline compared to the previous year".
As part of the efforts to reduce old inventory, the board has approved a "channel revival plan" to buy back or help clear inventories from key distributors, rationalise their sales network, and give them other financial help.
Li Ning stock lost 5.5 per cent before closing at HK$4.70, down 3.89 per cent, yesterday. The Hang Seng Index dipped 0.41 per cent.
"Although we have known the inventory problem is serious, it's still surprising to learn how much it would take Li Ning to deal with it," Guotai Junan International analyst Jerry Peng said.
He said most of the planned budget would be used to buy back off-season apparel and shoes, which was likely to exceeded 2.8 billion yuan in value.
"The buying back will continue next year. We expect the company to record a loss again next year," Peng said.
The sportswear seller founded by Olympic gymnast-turned-businessman Li Ning, was once the biggest player in the mainland market but lost its lead to rivals Nike, Adidas and Anta over the past decade. In recent years, it has suffered dramatic sales declines.
Earlier this year, Li Ning said first-half profit plunged 85 per cent to 44 million yuan.
"Overexpansion has caused channel partners' inventory to build up and their store productivity and profitability to decline," executive vice-chairman Jin-Goon Kim said.
"It is necessary to put in place a comprehensive transformation blueprint, including a one-time channel revival plan at a scale large enough to fix the problems that had built up … over the last few years."
The company, backed by Singapore sovereign fund GIC and US private equity fund TPG Capital, is still looking for a new chief executive and chief financial officer after resignations this year.