Online sales and the expansion of the Li Ning Young brand were key drivers behind a sales jump of 17.9 percent to 4,712.8 million yuan renminbi (€600.5m-$685.2m) for Li Ning Company in the first six months of this year, which led to a 42 percent rise in profit attributable to shareholders to RMB 268.6 million (€34.2m-$39.0m).
The share of online sales increased by 2.6 percentage points to 20.8 percent for the half-year. This mostly reduced the share of sales to franchised distributors, down by 1.5 percentage point to 44.4 percent, while the share of sales from direct operations was down by 0.4 percent to 33.2 percent and the share of international sales declined by 0.7 percentage points to 1.6 percent.
The Li Ning group's international sales actually declined by 19.5 percent to RMB 73.6 million (€9.4m-$10.7m). Its turnover advanced at 21.8 percent in the northern part of China, and by 15.3 percent in the south.
The brand continued to focus on basketball as well as running, training, badminton and sports casual products. The positioning has been supported by the Li-Ning Cloud technology for basketball footwear and lightweight knit footwear technology.
Among the most prominent products was apparel in the Wade series, the Butterfly 2018 classic remake of original Li-Ning sport fashion products, and young fashion gear derived from a partnership with Disney.
The number of points of sale under the Li-Ning brand increased by 7.2 percent since the end of 2017 to 6,898 at the end of June. The number was almost stable at 6,267 for stores under the mainstream Li-Ning brand, up by just five from six months earlier. The largest increase comes from Li-Ning Young, after the group acquired 361 stores from distributors at the start of this year. It ended up with 631 Li-Ning Young stores, up from 173 at the end of last year.
The Chinese group described 2018 as the year of Li Ning Young, as it began to more intensely capitalize on the appeal of sports fashion for young consumers. It has launched dedicated products in partnership with Disney, using properties such as Mickey and Star Wars. Another part of the investment went to retailing, with the opening of an experience store for Li-Ning Young at the River Mall in Shanghai. More of such projects are planned for the second half of the year.
Separately, the group opened another ten stores for the Danskin brand, the dance brand for which it obtained licensing rights in mainland China and Macao in October 2016, to explore the women's fitness market. The stores are all directly operated, and the group said that it was projecting 15 to 20 stores under the Danskin brand by the end of this year.
The retail sell-through for the combination of online and offline sales was up at a mid-teens rate, and the channel inventory turnover improved. Comparable store sales were up at a high-single digit rate, including a rise in new product sell-through at a mid-teen rate, helping to raise gross margin.
As with the Anta group, as reported above, the sales growth was driven by apparel, up by 30.7 percent to RMB 2,299.6 million (€293.1m-$334.4m) for the half-year. Footwear sales were up by 8.6 percent to RMB 2,190.7 million (€279.2m-$318.5m), while equipment and accessories accounted for a turnover of RMB 222.4 million (€28.3m-$32.3m), up by 1.2 percent.
The Li Ning group's gross profit margin expanded by 1.0 percentage point to 48.7 percent, with a larger proportion of higher-margin online sales and new products, as well as some price increases. It maintained its operating leverage, in spite of extra investment in new initiatives. These include the opening of larger stores and marketing activities around Li Ning's participation in the New York and Paris fashion weeks. Li Ning ended up with Ebitda of RMB 527.5 million (€67.2m-$76.7m), up by 26.9 percent.