Lining Closed Hongkong Store High Inventory But Discounted Selling

In 2010, Lining's overseas earnings accounted for 1.4% of its total revenue, which was about 1.9% in 2011.

Following the bankruptcy of Lining's Spanish authorized dealer, in September 12th, Lining reconfirmed that the company's Hongkong Tsim Sha Tsui branch was closed early this month, which is the only branch of Li Ning Co in Hongkong.

As to the repeated setbacks in the overseas market, Lining only revealed that it will focus on the domestic market in the future.

For overseas markets, companies will explore risks in a controllable and cost controllable manner.

Overseas market is not optimistic

It is understood that the closed Hongkong Tsim Sha Tsui branch is the only branch of Li Ning Co in Hongkong, settled in October 2009, then contracted for 2 years, with a monthly rental of HK $450 thousand.

Lining's store in Hongkong has been seen as a bridgehead for the company's overseas development, and the closure of Hongkong stores is a reflection of whether the company's overseas business is going to stop.

Independent commentator Ma Gang believes that "similar markets in developed countries such as Europe and America are very mature, and it is very difficult to sell in a mature market.

The sporting goods market in Europe and North America has been quite mature, and Nike and Adi have been expanding for many years, leaving the market for local brands to be quite small.

In this regard, Lining also revealed the difficult situation of overseas development.

Public data show that in 2010, Li Ning Co's overseas revenue accounted for 1.4% of total revenue, and by 2011, the proportion was about 1.9%.

To be honest, Lining does not have much overseas market share. From the company's overseas earnings, it is also difficult for the company to expand its overseas business.

It can be imagined that Lining is in the international market with Nike or ADI in the overseas market.

Much more than to pay for domestic development.

Analysts told reporters that Lining's foundation in China did not stand firm. Under this premise, it is unwise to compete with overseas famous brands such as Nike and ADI in overseas markets.

Wang Qian suggested that Lining should mainly develop the domestic market, first lay the foundation in the domestic market and then develop the overseas market.

Inventory backlog is hard to get rid of

Since China hosted the Olympic Games in 2008, there has been a movement boom, and major sporting goods companies have also increased horsepower production sports products.

It is precisely in the miscalculation of the consumer market, the current major sports brand businesses are facing a problem - high inventory.

Insiders analysis, the current domestic

Has entered the second half of the mature stage, the scale of growth decline, high market concentration, high inventory is the biggest feature of the industry.

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2011 Annual report shows that Li Ning Co's inventory in 2011 was 1 billion 133 million yuan, an increase of 40.64% over the 806 million yuan in 2010.

Higher inventories increased Lining's inventory provision to 188 million yuan in 2011, a 63.48% increase over the same period in 2010.

Lining is facing not only the problem of high inventory but also how to digest inventory.

The semi annual report 2012 showed that Lining's inventory didn't improve in the first half of the year, and its average inventory turnover period increased to 95 days.

In the case of shrinking consumer market, sporting goods manufacturers have launched various discount products to digest inventory, and thus set off a discount boom.

In addition to high inventory problems, Lining's fourth quarter high order double digit decline is even worse.

Lining's semi annual earnings report in 2012 showed that the company's revenue in the first half of the year was 3 billion 880 million yuan, down 9.5% from the same period last year, and the net profit attributable to shareholders of listed companies was 44 million 300 thousand yuan, down 84.9% from the same period last year.

In contrast, Anta's turnover in the first half of the year was 3 billion 934 million yuan, and its net profit was 770 million yuan.

It is understood that Lining will focus on the inventory problem, although the company expects to clear inventory in 1 to 2 years, but considering the market consumption and other issues, the company has no bottom.

In fact, the entire sporting goods industry is facing a high inventory test.

The problem of high inventory is widespread, leading to the downgrading of sports equipment companies.

Goldman Sachs said that mainland China's brand faced several structural problems, including slowing demand for terminal demand, strong competition from global brands such as Nike and Adidas, as well as low brand equity and lack of differentiation.

The cyclical problem of excessive channel inventory makes things worse.

The bank expects several quarters of disappointing data before the cyclical headwinds dissipate.

Even then, the bank believes that structural problems may limit the average sales growth in 2014 by 12%.

Goldman Sachs believes that Lining and Anta may survive in the market competition, but the prospect of small market value brands is hard to ascertain.

The industry's earnings per share for 2012-2014 years were down 8%/3%/10% on average.