Li Ning Company Limited said it pursued a direction of stable progress and high-quality development in the context of an overall recovery in the business even as challenges in the China domestic market remained.

The company reported that revenue grew steadily for the first half of 2023 ended June 30, rising by 13.0 percent to RMB14.02 billion, compared to RMB12.41 billion in the year-ago H1 period. The retail sell-through for the overall platform reportedly increased in the low teens, including online and offline channels.

Offline channel new product sell-through increased in the high-single-digits:

  • Sell-through mix of new products at 87 percent; and
  • Sell-out rate: 6 months at a flat level, 3 months declined by 2 percentage points.

Channel inventory reportedly decreased to low single-digits compared to the end of 2022. The inventory turnover and aging structure were said to “remain at a healthy level.”

Gross margin was 48.8 percent of sales in the first half, down 120 basis points from H1 last year.

Net profit margin reportedly remained at a healthy level of 15.1 percent in the first half, but it was down 250 basis points from the first half 2022 results.

Net profit attributable to equity holders was RMB2.12 billion in H1, down from RMB2.19 billion in the prior-year comparable period.

For the second quarter ended June 30, the retail sell-through of the Li-Ning point of sale (POS) platform increased in the mid-teens year-on-year, excluding Li-Ning Young.

  • Offline channel, including retail and wholesale, registered a high-teens increase, with retail (direct operation) increased in the high 20s and wholesale (franchised distributors) increased in the mid-teens, while the e-commerce virtual stores business registered a low-teens increase.

Same-store sales for the overall platform registered a low-single-digit increase year-over-year.

  • Retail (direct operation) same-store sales registered a high-single-digit increase, and wholesale (franchised distributors) registered a low-single-digit increase, while its e-commerce virtual stores business registered a low-single-digit increase.

For the six months ended June 30, net operating cash inflow increased 22.7 percent to RMB1.94 billion.

Working capital remained at a healthy level:

  • The percentage of gross average working capital to revenue was 7.5 percent; and
  • The cash cycle was flat from last year at 30 days.

The Board resolved to declare an interim dividend of RMB36.20 cents per ordinary share of the company issued or to be issued upon conversion of convertible securities for the six months ended 30 June 2023.