HONG KONG, March 26 Chinese sportswear group Li
Ning Co Ltd reported on Tuesday a
steeper-than-expected 1.98 billion yuan ($318.8 million) loss
for 2012, its first annual loss since it listed in 2004, hit by
inventory charges and fierce competition from domestic and
The result compared with a profit of 385.8 million yuan in
2011 and was deeper than the average forecast of analysts for a
1.09 billion yuan loss, according to Thomson Reuters Starmine
China's economic slowdown had resulted in inflated stock
levels and depressed earnings for retailers, including local and
foreign sportswear players - a sharp reversal of fortune after
an expansion blitz that followed the 2008 Beijing Olympics.
Li Ning, backed by Singapore sovereign fund GIC and
U.S. private equity firm TPG Capital, had warned in
December of a big loss in 2012 as it racked up as much as $288
million in expenses by buying back inventory from distributors.
The company had said it expected inventory charges to cut its
full-year earnings by up to 1.8 billion yuan.
"Market and industry conditions continue to be difficult,
and the Group's financial performance is expected to remain
challenging at least in the first half of 2013," company founder
and Chairman Li Ning said in a statement on Tuesday.
Li Ning, which competes with larger domestic rival ANTA
Sports Products, Adidas and Nike,
recorded a 2.02 billion yuan loss for the second half of 2012,
deeper than market estimates of a 1.13 billion yuan loss. In the
first half, it had posted an 85 percent drop in profit to 44.3
Revenue in 2012 fell to 6.74 billion yuan from 8.93 billion
yuan in the previous year.
Li Ning, which gained attention late last year when it
signed U.S. basketball star Dwayne Wade to produce a new line of
sportswear, had a network of 6,434 retail stores in China at the
end of December, a net decrease of 1,821 stores from the end of
2011. It said its gross profit margin was 37.8 percent in the
period, down from 45.3 percent a year earlier.
ANTA Sports reported in February a 21.5 percent drop in 2012
Nike, which has been grappling with intense competition in
China, posted last week a forecast-beating quarterly profit and
saw a turnaround in demand in greater China, with orders rising
4 percent, after falling in the previous two quarters.
Li Ning's shares have fallen 7.7 percent so far this year,
lagging a 1.8 percent drop in the benchmark Hong Kong index