Sportswear firm Li-Ning sees first-half loss soar 218pc
Interim chief executive sees challenges ahead as sportswear firm's first-half loss soars by 218.5pc
The mainland's second-largest sportswear brand, Li-Ning, saw its first-half loss soar 218.5 per cent year on year to 586 million yuan (HK$737.5 million) - versus a loss of 184 million yuan a year ago - and admits that a painstaking turnaround initiated two years ago will take much longer than expected to implement.
"I think that there are a few things that were more difficult than I first imagined two years ago," interim chief executive Jin-Goon Kim said. "The biggest one is there were some weak channel partners that were more challenging to turn around. This is a very hard thing to control."
Shares of Li-Ning dropped 4.99 per cent yesterday to close at HK$4.76. In contrast, the Hang Seng Index eased 0.36 per cent.
The brand founded by Olympic gymnast Li Ning, who won three gold medals in the 1984 Los Angeles games, has been working on a transformation from a wholesale model to a direct retail one and redesigning its products after suffering from overexpansion and poor brand differentiation.
An MB BrandZ study last year found that Li-Ning was the most recognised sports label on the mainland after foreign brands Nike and Adidas.
"First in the clearance stage you're focusing on cash flow, not profit," Kim said. "Then in the second stage, because you brought down the size of the business, your scale is not big enough for your fixed costs so you have to ramp back up to cover the costs.