Li Ning Co. reported recently that orders for the second quarter of 2011 have fallen 7% in footwear and 8% in apparel. Both apparel and footwear products saw their average retail prices increase by more than 8% for the quarter. Management for the Chinese athletic wear manufacturer said the company has been unable to sustain projected store openings as operating costs continue to increase.
The company said total order value, based on tagged retail prices, was flat with last year. After taking into account the impact of the group's wholesale discount for distributors, total order value in sell-in terms declined by 6% compared to the same period last year.
CEO Zhang Zhiyong said Li Ning has adopted a “pre-emptive” approach to allaying the problems by consolidating low-efficiency sub-distributors, optimizing retail channel structure, enhancing product lifecycle management and offering wholesales discounts to distributors. Zhiynong said although these measures may lead to lower orders at the next two trade shows, “they will help ensure the group’s stable and healthy development for the long term.”
In September, Li Ning reported orders for the first fiscal quarter of 2011 were ahead 12% compared to a 20% rise for the third and fourth quarters of fiscal 2010. Shortly thereafter, Li Ning debuted its first running shoe in the U.S. market.
