2025-11-07 01:28Summary of Li Ning Company Conference Call Industry and Company Overview - The conference call discusses the performance and strategies of Li Ning Company, a prominent player in the sportswear industry in China, particularly focusing on its sales performance and market strategies for the latter part of 2025 and into 2026 [2][3][4]. Key Points and Arguments Sales Performance - October 2025 sales performance did not meet expectations, with offline sales experiencing negative growth, which offset the growth from e-commerce during the Double Eleven pre-sale [2][3]. - Overall, the company faced continuous negative growth across all channels in early November, indicating persistent pressure on terminal sales [2][3]. - Discounts have deepened both online and offline, with direct store discounts being particularly significant [2][3]. E-commerce Strategy - Li Ning's Double Eleven strategy for 2025 remains largely unchanged from 2024, focusing on traditional platforms like Tmall and JD.com, while experiencing volatility in live-streaming platform sales [2][6]. - The company aims to ensure Gross Merchandise Volume (GMV) while controlling discounts to avoid excessive markdowns in a weak demand environment [6]. Product Performance and Future Plans - In Q3 2025, various product categories showed a decline in sales, with basketball and sports lifestyle categories experiencing significant drops of approximately 20% and 12%, respectively [7]. - The company plans to leverage technology and new running shoe iterations to prepare for the upcoming marathon season in Q1 2026, alongside launching a new winter clothing line featuring "Aerospace Dynamic Warmth Technology" [7][8]. - The badminton category, although small, showed impressive growth, with a slowdown from nearly 40% in H1 to over 30% in Q3 [8]. Market Demand and Competitive Landscape - The basketball market is currently weak, attributed to reduced interest and star player influence; however, the company sees potential in youth engagement through sponsorships [9]. - The sports lifestyle segment faces intense competition and homogenization, prompting organizational adjustments and the introduction of new design elements [9]. Dividend Policy and Inventory Management - Li Ning maintains a 50% interim dividend payout ratio, with potential for future optimization pending board approval [10]. - Dealers express cautious optimism about new products, with inventory levels being managed to maintain a healthy stock-to-sales ratio of 5-6 months, aiming to reduce it to 4-5 months by year-end [11]. Organizational Changes and Brand Strategy - The company has implemented a category management system to enhance operational efficiency, with new leadership in the China Li Ning and 1990 brands [13][14]. - Despite facing short-term challenges, the company aims to strengthen brand positioning and improve market performance through strategic marketing and product optimization [14]. Financial Outlook and Challenges - Profit margins are expected to face pressure in 2026 due to increased Olympic-related expenses and resource allocation for upcoming events [17]. - The company anticipates a stable markup rate despite challenges in maintaining average pricing due to material cost fluctuations [18]. Outdoor Product Development - Outdoor products currently account for a low single-digit percentage of total revenue, with expectations for gradual growth as the company increases its presence in this segment [19]. Shareholder Confidence - The major shareholder, Feifan, continues to increase its stake in Li Ning, signaling confidence in the company's strategy and market outlook [20]. This summary encapsulates the critical insights from the conference call, highlighting the challenges and strategic directions of Li Ning Company in the competitive sportswear market.