Li Ning Co., Ltd. today announced the Group's interim results for the period ended 30 June 2017 (the “periodâ€). The data shows that the company continues to maintain its growth momentum and has achieved encouraging results in terms of financial and operational aspects.
For the six months ended 30 June 2017, the Group's revenue amounted to RMB 3.996 billion, representing an increase of 11% over the same period in 2016. Gross profit increased by 14% to RMB 1.904 billion compared with RMB 1.678 billion in the same period in 2016. The overall gross profit margin of the Group improved from 46.7% in the same period in 2016 to 47.7% in the period. The increase of 1% was mainly attributable to the direct business with higher gross profit margin (including the increase in the proportion of self-operated retail and e-commerce, the increase in sales of new products in the wholesale channel, and the improvement in new product discounts in self-operated stores. The Group's profit attributable to equity holders increased to RMB 189 million, compared with RMB 113 million for the same period in 2016. The Group's share of the equity interest rate was 4.7% (2016: 3.2%). The equity return attributable to equity holders was 4.3% (2016: 3.5%).
The core brand Li Ning brand's revenue accounted for 99% of the group's total revenue, reaching 3.966 billion yuan, an increase of 12% over the same period last year. In terms of sales channels, Li Ning's e-commerce business continued to expand, and its share of total revenue continued to rise. Li Ning's brand revenue accounted for 18%. In terms of ordering orders, Li Ning brand products from franchisees recorded a year-on-year growth for 15 consecutive quarters. The orders for the first quarter of 2018 signed by the latest order meeting continued to execute the group order meeting orders. The precision strategy has recorded a high single digit growth year by year.
During the period, the Group continued to build the Li Ning experience value for all three pillars through upgrading its products, channels and retail operations capabilities. In terms of products, we continue the inheritance of Li Ning brand professional sports DNA, and launched a series of running shoes such as “Li Ning Arc†and “Super Light Fourteen†to enhance the performance of sports functions. At the same time, we will add more entry-level running shoes to create a continuous and diversified product experience for consumers. At the same time, the "WADE" series of basketball categories and the fashion "BAD FIVE" series featuring street basketball style are avant-garde. Sporty fashion, providing a more sporty wearing experience.
In the first half of 2017, due to the company's initiative to adjust channels, the number of points of sale decreased by 111 net. The company adopts a strategy of refining the category of leading stores and expanding efficient stores, striving to improve the store efficiency and profitability of single stores, and strategically shut down inefficient and loss-making stores. Based on the regional differences in consumer demand, the Group strives to display and provide products that best meet local needs at the terminal, and provides flexible and diverse sports experiences and purchasing experiences based on category attributes. In line with the deployment of the company's overall marketing activities, from the bottom up, improve brand awareness and loyalty, increase consumer stickiness. During the period, the overall retail flow recorded a high single-digit growth, and the new product sales rate and discount rate increased by more than 4 percentage points and improved by 1 percentage point.
In terms of cash flow management, the Group's net cash generated from operating activities during the period was RMB 589 million (excluding the impact of Double Happiness in 2016 of RMB 304 million). The cash and cash equivalents as at 30th June, 2017 was RMB 2.365 billion, a net increase of RMB 411 million as compared to 31 December 2016. As the overall performance of channel partners has shown a steady upward trend, the recovery of trade receivables has increased significantly, which has greatly improved the Group's cash flow.
In the first half of 2017, Li Ning's e-commerce business maintained a relatively efficient operational efficiency, with revenue up 58% year-on-year. The Group continued to invest more in the precise digital operation of e-commerce, gradually established and improved the sales trend forecasting system, and applied the trend forecasting system to the coordination and integration of commodity planning and assembly, supply chain acceleration, and more precise operation. Waiting for the front and back working sections, and achieved good results.
Li Ning also invests in some new areas to grasp the huge potential of the future development of the sports goods industry and diversify its brand portfolio. In the first half of 2017, the Danskin brand refined product line, including the fashion sports series (Dansfit) covering fashion design sports products, the Danslife series with certain functional fabrics, and the high-end fashion series (Danslux) and Ballet series (Dance). At the same time, the brand has established a cooperative relationship with suppliers with professional experience.
In the future, the Danskin brand will focus on digital channel promotion, aiming to promote brand value and strengthen communication with consumers through daily contacts. The channel focuses on influential landmark malls in megacities and is expected to open 3 to 5 points of sale in the fourth quarter of 2017.
2017, spring mark Maintaining the fast fashion brand positioning of leisure sports, the style continues to be dominated by fashion and creative life, while taking into account the public demand for sports concepts. Based on its own channel expansion plan, the brand expands its market with mature shopping malls as its main goal and continues to optimize its products. As of June 30, 2017, in Beijing, Shanghai, Hefei, Dalian and Qingdao, 8 sales points have been set up according to the brand concept of adjustment and optimization.
In the first half of 2017, Li Ning opened about 20 sales points in 14 provinces across the country and concentrated in the northern region. The company provides customer service and support in terms of channels, products and retail operations. The Wade parent-child products, running training sports trench coats, children's clothing products and Q Yun children's shoes products, which were listed in June 2017, are favored by consumers with fashionable, professional, safe and colorful selling points. Li Ning YOUNG The first quarter of 2018 was held in June. The design, style and materials of the products were further enhanced to cater to the preferences of young people and meet their sports needs.
Mr. Li Ning, the founder and executive chairman of the group, concluded: “In the first half of 2017, we completed our core work and improved our operations and profitability. Looking ahead, we will continue to strengthen our business focus to achieve the future profitability of the company. And sustainable growth. We will continue to build Li Ning experience value based on our products, channels and retail operations capabilities. We will continue to increase our investment in digital operation and transformation, and use resources reasonably and prudently to explore new business opportunities and market potential. .
In order to cope with the ever-changing market environment, the company will maintain the theme of long-term development by consolidating brand value and deepening Li Ning's experience value. We will provide a flexible experience approach to differentiated consumer habits, find and expand business development space, and foster new opportunities for the company's long-term profit growth. â€
According to research and analysis, at present, most brand enterprises are developing enterprise light asset strategy, digging deeper into the value and added value of the brand. Li Ning keeps pace with the development of the times, actively seeks breakthroughs in business development, and actively adjusts sales channels. At the same time, the core categories continue to exert strength, the proportion is gradually increasing, and the Internet e-commerce business continues to expand, which also injects new vitality into the development of the company. In order to diversify the product brand portfolio, Li Ning is also trying to invest in some new areas, and there is reason to believe that the future will continue to expand the development space.
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