Summary of Li Ning Company Conference Call Company Overview - **Company**: Li Ning Company - **Period**: Q2 2025 Key Points Store Performance - In Q2 2025, Li Ning's main brand stores decreased by 18, while Li Ning YOUNG brand stores decreased by 33, aligning with the company's plan for the year [2][4] - As of the end of Q2 2025, the total number of Li Ning main brand stores was 6,099, a net increase of 11 from the previous quarter but a decrease of 18 from the end of the previous year [4] Sales and Revenue - Overall, the company achieved low single-digit revenue growth of approximately 1% in Q2 2025, which was below internal expectations [3] - The offline channel experienced a low single-digit decline, while the e-commerce channel saw a mid-single-digit growth, although performance during the 618 shopping festival was weak [3][5] Marketing and Brand Strategy - Following the signing of Yang Hansheng, Li Ning plans to launch limited edition products featuring his personal logo, aiming to enhance brand recognition despite short-term challenges in the basketball category [2][7] - The company is focusing on the "Honor Series" product line for the Olympics, with marketing centered around "Olympics plus Technology" [2][8] Inventory Management - Li Ning reported a healthy inventory situation with a turnover rate of approximately 4 months and a stock-to-sales ratio of around 4 [2][10] - The company is monitoring international brand inventory normalization and trends in high-end technology products to adjust its strategy accordingly [9][10] Market Challenges - The overall retail environment remains challenging, with increased discounting pressures leading to a decline in gross margins [2][14] - The company anticipates continued pressure on gross margins for the remainder of the year, making it difficult to maintain the previous year's gross margin level of 49.4% [14] Future Outlook - For H2 2025, Li Ning's marketing efforts will focus on the Olympics, with specific attention on running products that emphasize protection and stability, as well as outdoor products for the autumn and winter seasons [17][18] - The company expects competition to remain fierce in 2026, which could benefit market health but is difficult to predict due to macroeconomic uncertainties [11][12] Financial Strategy - Li Ning has increased its interim dividend and plans to maintain a dividend payout ratio of 50% while exploring other forms of shareholder returns, such as stock buybacks [26] - The company aims to balance revenue growth and discount strategies while maintaining a healthy inventory and managing risks [15][16] Marketing Activities - In H1 2025, Li Ning conducted various marketing activities, including a partnership with the Chinese Olympic Committee and events promoting Olympic culture across multiple cities [25] - The company plans to increase marketing expenditures in H2 2025, particularly due to the Olympic-related activities [23] Product Development - Li Ning is expanding its product lines in niche categories like tennis and pickleball, while the badminton category has shown significant growth, although it remains smaller compared to major categories like running and basketball [21][22] Conclusion - Li Ning is navigating a challenging retail environment with strategic marketing initiatives and a focus on inventory management, while preparing for future growth opportunities in the context of the upcoming Olympics and evolving market dynamics [27]