Li Ning, a leading sportswear retailer on the mainland, saw its shares fall more than 4 per cent yesterday after reporting bigger-than-expected losses for last year amid weak market conditions and a costly transformation plan.
The company posted a net loss of 1.98 billion yuan (HK$2.48 billion), compared with a profit of 385.8 million yuan the previous year. Analysts had estimated about 1.4 billion yuan of losses. Revenue tumbled 24.5 per cent to 6.74 billion yuan.
"Compared to the substantial loss recorded by the company, investors are now more concerned about the long-term prospect of the sportswear industry and whether the company's transformation plan will succeed," said Forrest Chan, an analyst at CCB International Securities.
The stock dropped 4.1 per cent to close at HK$4.46 yesterday. It has fallen nearly 8 per cent this year, against a 1.8 per cent drop in the Hang Seng Index.
Executive vice-chairman Kim Jin-goon said yesterday that the company had written down more than 900 million yuan of outstanding payments, a major cause for the poor results. The provisions for this year would be less, he added.
Li Ning has been struggling to clear its stocks and restructure distribution channels to boost market share.
In January, it said it would raise up to HK$1.87 billion through convertible securities for its switch from a wholesale to a retail-oriented business model. Kim said the firm had no further plans to raise funds now.
"Market and industry conditions continue to be difficult, and the group's financial performance is expected to remain challenging into at least the first half of 2013," the company said in the filing. "Full-year operational performance is expected to gradually stabilise in 2013."
Li Ning did not propose any final dividend for the period.