Li Ning’s sales recover, but losses yet to follow

During the first six months of the year, Chinese sporting goods brand Li Ning increased sales by 8.0 percent to 3,137 million yuan renminbi (€381.3 million) compared with the first half of 2013. As of June 30th, gross profits hit RMB 1.4 billion (€170.2 million) from RMB 1.27 billion (€154.4 million) last year. Losses before income tax however, jumped to RMB 508.1 million (€61.8 million) from RMB 129.2 million (€15.7 million) only a year ago. The company posted a loss after interests, taxes and write-offs (Ebitda) of RMB 351 million (€42.7 million). Net losses soared to RMB 562.6 million (€68.4 million) from RMB 162.1 million (€19.7 million).
Despite this, Li Ning considers it is on track with its restructuring plan which was implemented to enhance profits compared with revenue and to reduce its offerings in line with the slowdown of demand in China. In addition, the leading sports brand in China has been trying to market products which achieve a higher average retail price. And the expansion in their points of sale network will only be moderate.
Given the general business mood in China and overstocking issues, Li Ning points out that it will take time for it to hit profitability. The Cayman Islands-registered group is therefore looking to increasingly move away from products which are no longer viewed as core items in sportswear.

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