On August 13, Li Ning (02331. HK) released the mid-2021 performance report. As of June 30, Li Ning’s revenue was 10.197 billion yuan, a year-on-year increase of 65%; The net profit exceeded 1.962 billion yuan, a year-on-year increase of 187%; The gross profit margin increased by 6.4 percentage points to 55.9%. Many of its indicators are the highest level in the history of the same period since it was listed in 2004.
Li Ning said that the gratifying results were due to the continuous return of the group’s sales improvement measures during the epidemic period. At the same time, it benefits from the improvement of domestic consumers’ requirements for healthy life and the full affirmation and strong support of domestic sports brands.
Red Star capital Bureau noted that not only Li Ning’s performance improved, but also the revenue increased significantly in the first half of the year from the performance forecasts released by many domestic sports brands such as Anta (02020. HK) and Tebu International (01368. HK).
Li Ning’s revenue exceeded 10 billion in the first half of the year
Net profit rose 187%
On August 13, Li Ning released the mid year performance report, and many indicators were the highest level in the same period since Li Ning was listed in 2004.
In terms of revenue, as of June 30, Li Ning’s revenue was 10.197 billion yuan, a year-on-year increase of 65%, which means that Li Ning earned more than 50 million yuan in the first half of the year.
Red Star capital Bureau found that the clothing business greatly boosted Li Ning’s overall performance, with a year-on-year growth rate of 72%; Footwear growth followed closely, with revenue growth reaching 57%, accounting for 95% of total revenue. However, these incomes basically come from domestic consumers, and the international market has not been opened yet. The semi annual report shows that during the reporting period, Li Ning’s international market sales were only 122 million yuan, accounting for only 1.2% of the revenue.
In terms of profit, Li Ning’s net profit in the first half of 2021 exceeded 1.962 billion yuan, a year-on-year increase of 187%; The gross profit margin increased by 6.4 percentage points to 55.9%; Earnings per share was 79.04 yuan.
Li Ning explained that during the reporting period, the retail discount was significantly improved, and some inventory provisions were reduced due to the decline of the original value of inventory and the improvement of stock age; In addition, the proportion of direct sales and e-commerce channels with high gross profit margin has increased, which leads to the increase of gross profit margin.
Red Star capital Bureau noted that the specific reason for the significant increase in revenue came from the contribution of Li Ning’s sales channels. First, the flow of offline terminal direct sales increased significantly by 88% year-on-year. Li Ning said that this was because most direct stores were established in domestic second tier cities and above. In the same period last year, the impact of the epidemic was particularly obvious, and direct stores recovered greatly in this period; Secondly, the flow of e-commerce channels and franchised dealers increased significantly, by 77.8% and 47.7% respectively.
Although Li Ning’s main flow comes from offline stores, Li Ning not only did not expand the store, but even chose to close it. According to the financial report, as of June 30, 2021, there were 6745 offline sales points such as regular stores and flagship stores of Li Ning brand (including Li Ning core brand and Li Ning young), a decrease of 188 compared with December 31 last year; 63 dealers, down 2.
Li Ning explained that the main purpose of closing stores is to optimize channels and efficiency, accelerate the construction of high-quality channels, gather large stores in shopping centers, continue to promote the landing of efficient large stores such as flagship stores, continue store optimization, and accelerate the processing of loss, inefficient and micro area stores.
Reprint indicated source：Shine Trader Limited Live information