Li Ning, the Chinese sports company, warned that it would suffer a loss of up to 820 million yuan (€114.4m-$132.1m) for 2014, although its performance has improved in the second half of the year on the back of the many measures taken in the last two years to support the brand and improve its distribution.
The company had already been making a loss in the two previous years. The worst-case loss of RMB 820 million (€114.4m-$132.1m) would bring the combined loss for the last three years to RMB 3,190.7 million (€444.8m-$513.8m). However, the situation is apparently improving, since Li Ning reported a loss of nearly RMB 585.8 million (€81.7m-$94.3m) for the first half of the year – indicating that the loss was smaller in the second half. The company is still searching for a permanent chief executive after the departure of Jin-Goon Kim, who resigned in November.
Apart from the unsold inventories that plagued many Chinese sports companies, Li Ning's sales have been hurt by a change in positioning that failed to convince consumers. This has been entirely adjusted again, while far-reaching reforms have been carried out to improve Li-Ning's offering and distribution. The full details on this strategy are outlined in our Chinese market report, released this week.
