Li Ning Company Limited reported its overall performance remained stable with pragmatic growth in the 2024 first half (H1) period. Revenue amounted to RMB 14,345 million in H1, an increase of 2.3 percent compared to RMB 14,019 million in the corresponding H1 period of 2023.

Gross profit increased by 5.8 percent to RMB 7,236 million in the first half from RMB 6,839 million in the 2023 H1 period. Overall gross margin was 50.4 percent of net sales in the six-month period, up 160 basis points from 48.8 percent in the 2023 H1 period.

Basic earnings per share was RMB 75.80 cents in H1, compared to RMB 80.63 cents in the year-ago corresponding period.

The Board reportedly resolved to declare an interim dividend of RMB 37.75 cents per ordinary share of the company issued or to be issued upon conversion of convertible securities for the six months ended 30 June 2024. This compared to the 2023 H1 dividend of RMB 36.20 cents. The interim dividend payout ratio is 50 percent.

In terms of cash flow management, the Group’s net cash generated from operating activities in the first half amounted to RMB 2,730 million, compared to RMB 1,942 million in the 2023 H1 period.

Cash and cash equivalents (including cash at banks and in hand, and fixed term deposits with original maturity of no more than three months) amounted to RMB 6,147 million at June 30, 2024, representing a net increase of RMB 703 million as compared with the position as at December 31, 2023. Adding back the amount recorded as fixed-term deposits held at banks, cash balance amounted to RMB 17,558 million, which represented a net decrease of RMB 417 million as compared to December 31, 2023.

During the period, revenue increased year-on-year while the efficiency of settlement remained stable, which, in conjunction with the reasonable purchase and payment plan, contributed to the year-on-year increase in net cash generated from operating activities. The Group will continue to place extra emphasis on its cash flow management to ensure stable development of the Group in the long run.

Operational Summary
During the first half, the Li Ning Company said it adhered to the core strategy of “Single Brand, Multi-categories, Diversified Channels” focusing on seven major business transformation tracks and continuously strengthening its sports genes to establish a clear professional sports brand positioning. Meanwhile, the company was efficiently empowered in supply chain management, logistics platform, channel expansion and store upgrading, jointly building a solid foundation for the overall sales of the Group.

In terms of technological innovation, in May 2024, the Group successfully held a technology conference with the theme of “In My Name, Tech Li-Ning,” which demonstrated that the Group has built two key pillars of product development and innovation consisting of technology R&D and sports science research through long-term accumulation of technological innovation. At the conference, the Group presented its six innovative technologies of “Carbon Core”, “Dual-Stage Assist Curves”, “Super Jiang”, “GCU”, “Super BOOM” and “Extreme Boom Fiber”, and also unveiled three new innovations for the first time: the running shoes of “Shadow 3”, the premium racing shoes of “Dragonflight” and dual-vent nanotechnology for rainstorm protection.

The company said it continued to focus on the five core categories of running, basketball, badminton, fitness and sports casual, and continued to make efforts in the innovation in sports technology. At the same time, the Li Ning Company reported it also actively integrated with sports fashion culture, launched sports products with both technology and fashion attributes and continuously enhanced the core competitiveness of products. In addition, the company said it actively deployed universal marketing to enhance consumers’ awareness of the Group’s products, continuously enhance brand influence and expand its consumer base.

As of June 30, the number of conventional stores, flagship stores, China Li-Ning stores, Li-Ning 1990 stores, factory outlets and brand stores under Li-Ning brand (including Li-Ning Core Brand and Li-Ning Young) amounted to 7,677 locations, representing a net increase of nine points of sale (POS) as compared to December 31, 2023. The number of distributors was 44 (including sales channels of China Li-Ning stores), representing a net decrease of two distributors as compared to December 31, 2023.

In respect of the e-commerce operation, the e-commerce of Li Ning continued to focus on breakthroughs in professional functional products, especially achieving rapid growth in the field of running shoes, while professional basketball shoe products also consolidated its market leading position.

In the kidswear business, Li-Ning Young said it “comprehensively streamlined the youth product matrix, clarified the core competitiveness of clothing and accessories, and improved the footwear product matrix.”

For marketing, Li-Ning Young consolidated its marketing resources and actively explored omni-channel marketing and community operation. The brand has partnered with basketball star Dwyane Wade to further increase the brand influence. Li-Ning Young also actively actively carried out various member community activities and launched new celebrity athlete in-store opening activities to continuously drive store traffic.

As of June 30, the total number of Li-Ning Young points of sale (POS) in China amounted to 1,438 locations, representing a net increase of 33 POS since the end of the previous quarter and a net increase of 10 POS since the beginning of this year. The company said it will continue to intensely develop its Li-Ning Young business, take a product focused approach to upgrade core product technology and design, advance the exploration of market demands and product categorization and strengthen brand promotion, so as to develop Li-Ning Young into a leading professional sportswear brand for kids in China.

Outlook
Li Ning, executive chairman and joint CEO of the company, concluded, “The country’s series of in-depth market reform policies will steadily advance, providing the Group with a fair and more vibrant market environment, and opening up broader growth space. The Group will adhere to its established development strategy, rely on the professional sports genes of its brands and continue to launch high-quality sporting products for the public. At the same time, the Group will continue to cultivate the sports market in China, and ride the wave of the Olympics, upholding the spirit of ‘Anything is Possible’, to propel the Chinese sports industry onto the international stage.”

Image courtesy Li Ning