Li Ning Stock gains 4.4% on improved revenue and margin outlook

Shares of Li Ning Company Limited closed 4.4% higher at HK$19.70 (€2.36, approx. $2.54) on Thursday, as the market reacted to the company’s latest quarterly update. The rally suggests investors are prioritizing the brand’s improved full-year guidance over a low-single-digit decline in retail sell-through recorded in the fourth quarter of 2025.

Revised guidance and margin stability

While the broader retail environment remains challenging, management now anticipates a “mild increase” in total revenue for the 2025 fiscal year. Furthermore, the company expects net profit margins to reach the upper end of the high-single-digit range (approximately 9% to 10%), supported by disciplined cost controls and government subsidies.

Q4 operational performance

The unaudited operational data for the quarter ended December 31, 2025, revealed a complex landscape for the sportswear giant:

• Retail Sell-Through: Overall platform performance for LI-NING POS (excluding LI-NING YOUNG) declined by a low-single-digit on a year-on-year basis.

• Offline Channels: Combined retail and wholesale channels saw a mid-single-digit decline. Specifically, direct retail declined by a low-single-digit, while franchised wholesale fell by a mid-single-digit.

• Digital Presence: The e-commerce virtual store business remained flat. However, industry analysts note significant traction on the Douyin platform, which saw double-digit growth.

Store network optimization

The company continued to refine its physical footprint to improve efficiency. As of December 31, 2025, the total number of LI-NING POS in China stood at 6,091, representing a net decrease of 26 locations since the beginning of the year. Within this shift, direct retail POS decreased by 59, while wholesale POS saw a net increase of 33. Conversely, the LI-NING YOUNG segment expanded, reaching 1,518 POS, a net increase of 50 for the year.

Analyst Perspectives

Market reaction has been cautiously positive. Goldman Sachs raised its target price to HK$19.50 (€2.34) [$2.51], citing the brand’s effective operational expense management as a key stabilizer. Morgan Stanley analysts noted that while January sales began slower than expected, leading to some regional discounting, the long-term “turnaround” story remains intact. However, CLSA maintained a “Hold” rating, pointing to potential margin pressure from increased marketing spend for the upcoming 2026 Winter Olympics.