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Hong Kong company reporting season

Sportswear giant Li Ning cautious over outlook amid worsening US-China trade war

Revenue climbs 18pc to 4.71b yuan as it easily beats analysts forecast of 4.53b yuan

PUBLISHED : Monday, 13 August, 2018, 4:54pm
UPDATED : Monday, 13 August, 2018, 11:07pm

Chinese sportswear giant Li Ning is “cautious” about the nation’s business environment even though it may not be directly affected by the escalating trade war, the founder said after the company posted a 42 per cent jump in first-half profit, bolstered by stronger apparel sales and e-commerce business.

“Our market is primarily domestic, and there’s a rigid demand for sportswear,” Li, the Olympic gold medal gymnast after whom the company is named, said on Monday. “But China can’t do business with its doors closed, and its economy is linked to the world.”

The firm’s net profit rose to 269 million yuan (US$39 million) for the first six months of this year from the same period last year, bolstered by stronger apparel sales and e-commerce business. Revenue climbed 18 per cent to 4.71 billion yuan, beating the forecast of 4.53 billion yuan of analysts polled by Thomson Reuters.

Sales of apparel wear jumped 31 per cent to 2.3 billion yuan, making up nearly half of the revenue. Meanwhile, sales on online platforms accounted for 22 per cent of the revenue, up from 19 per cent last year.

International markets accounted for 1.6 per cent of the company’s revenue in the first half of the year, down from 2.3 per cent in the same period last year.

More investment in advertising and marketing had partially driven the firm’s apparel business, which the firm only started to focus on two years ago, said Li, who is also executive chairman and interim chief executive.

He said the firm’s focus would remain on the domestic market.

The brand took to the New York and Paris fashion week in February and June to showcase its latest designs, which it said received positive feedback from its customers.

Li Ning is also collaborating with Disney to launch products for its childrenswear brand, Li-Ning Young, which has added 458 stores in China over the first six months of this year.

The company, which was the first Chinese sportswear brand listed in Hong Kong, plans to grow its main brand’s network of 6,267 stores by 50 to 100 in the rest of the year while shutting down inefficient shops, according to Li.

It also looking to improve its business in the central and southern parts of China, which is the power house of the economy, as half of its current revenue comes from the northern regions.

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