Li Ning Co. said 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%.
As a result, total order value, based on tagged retail prices, was maintained at the same level as last year.
After taking into account the impact by the Group's wholesale discount for distributors, total order value in sell-in terms declined by 6% compared to the same period last year.
“With regard to the results of this Trade Fair, we have established the view that, the retail environment for the sporting goods industry this year is faced with heavy pressure. On one hand, the previous growth model of heavy reliance on store openings by the sub-distributors is no longer sustainable; on the other hand, operating costs at the retail level are fast escalating. Given this environment, the operations of the Group's independent distributors were inevitably affected. Their forecasts for growth in the coming year had become more conservative, ” said Zhang Zhiyong, CEO of Li Ning.
“We have been adopting a pre-emptive approach for these problems and challenges,” he continued. “The Group initiated earlier reform measures for its distribution channels. The measures include consolidation of low-efficiency sub-distributors, optimization of retail channel structure, enhancement of product lifecycle management and offering more wholesale discounts to distributors. These are aimed at addressing the challenges faced with at the retail level in an effort to bring about improvements in the overall retail efficiency, enhancements in same-store sales growth and less aggressive discounting at the retail level, thereby constituting a healthier retail environment as a whole.”
- advancing further the implementation of the Li-Ninh brand revitalization strategy to enhance the brand's core competences;
- promoting distribution channel reform;
- strengthening retail management capabilities.
