2025-07-16 15:25Summary of Li Ning Company Conference Call Company Overview - Company: Li Ning Company - Date: July 16, 2025 Key Points Industry Performance - June sales showed a month-on-month decline, with both online and offline channels experiencing negative growth due to base effects, holidays, and weather conditions [2][3] - Discounts deepened in Q2, particularly in e-commerce, impacting direct wholesale channels [2][4] - Overall gross margin faced challenges in the first half of the year, making it difficult to maintain flat margins for the entire year [2][4] Product Performance - Functional products outperformed lifestyle products, with running and fitness categories achieving double-digit growth in H1 2025, while basketball and lifestyle categories performed poorly, particularly basketball sales [2][5] - The growth in H1 was primarily driven by professional categories, with footwear performing better than apparel [2][5] - Key running shoe IPs such as "Ultra Light," "Chi Tu," and "Fei Dian" met expectations, with "Fei Dian" and "Chi Tu" performing well, while "Ultra Light" showed weaker performance [2][5] Strategic Partnerships - Li Ning signed a long-term contract with Yang Hanshen in 2023, planning to quickly launch related products during key competition periods [2][6] - No signature shoe plans currently exist, but future consideration will depend on performance, alongside enhanced personal marketing efforts [2][7] Marketing and Branding - The company is focusing on Olympic-related marketing, with the "Rong Rong Yao" series as a direct product line for the Olympics [3][7] - Future product launches will include more technology-enhanced products, expanding into other functional categories and lifestyle areas [3][7] Retail and Distribution - Approximately 100 new children's clothing stores are planned for this year, primarily targeting mid-to-low tier markets [3][9] - The number of outlet stores remains stable at around 400, with no large-scale openings planned [3][9][10] - E-commerce growth was only in the mid-single digits in Q2, falling short of expectations due to the impact of the 618 shopping festival [3][12] Financial Outlook - The company maintains guidance for flat revenue and a high single-digit net profit margin for 2025, but faces significant challenges in the second half due to weak terminal trends and intense competition [3][29] - Future plans include gradually accelerating revenue growth over the next 3-5 years, aiming for a net profit margin of at least 10% [3][29] Competitive Landscape - The company acknowledges ongoing competition from international brands like Nike, which still holds the largest market share [3][17] - Domestic brands have made significant progress in operations, technology, and design, narrowing the gap with international competitors [3][17] Cost Management - Marketing expenses are expected to rise due to Olympic sponsorship and athlete endorsements, with the marketing expense ratio projected to increase from 9.5% to a low double-digit level [3][18] - Human resource costs are also anticipated to rise slightly due to team expansion and talent acquisition [3][19] Future Strategies - The company plans to optimize store locations to control rental costs and enhance same-store sales [3][21][22] - Product assortments will be adjusted based on market tier and store type to capture business opportunities effectively [3][23][24] Segment Growth Potential - The running category is projected to maintain a 30% share of overall business, with future growth opportunities balanced against risks associated with over-reliance on a single category [3][26][28] This summary encapsulates the key insights from the Li Ning Company conference call, highlighting the current performance, strategic initiatives, and future outlook within the competitive landscape of the sportswear industry.