Li Ning reports loss of 781 million yuan as founder takes reins
Chinese sportswear brand Li Ning reported a loss of 781 million yuan (HK$972 million) for last year and announced that its namesake founder will take over as interim chief executive as part of a restructuring plan.
Revenues were up 15.5 per cent to 6.73 billion yuan while gross profits rose 15.8 per cent to 3 billion yuan. The firm posted a 391 million net loss in 2013.
“Operating cost and expense, working capital management and channel profitability are areas which still have significant room to be improved and strengthened,” the firm said in an exchange filing.
The brand, founded by Olympic gymnast Li Ning, is moving from wholesale operations to a direct retail model and has been redesigning its products, aiming for better brand differentiation, after it expanded too quickly.
The company’s troubles started in 2010, when a plan initiated by former chief executive Zhang Zhiyong to focus on manufacturing high-end products led to overstocked warehouses and huge losses. Consumers did not buy into Li Ning’s strategy of quality products with higher prices.
In early morning trade on Thursday its shares rose 2.49 per cent to HK$3.71. The shares had fallen around 40 per cent over the previous 12 months.
