* H1 net loss 184 mln yuan vs consensus of 241 mln yuan loss
* Inventories close to normal as restructuring bears fruit
* ANTA reported order book grew for 1st time in six qtrs
* Still too early to be too optimistic about sector -analyst
* Wade-branded shoes to be available in U.S. in few mths
By Donny Kwok and Alexandra Hoegberg
HONG KONG, Aug 12 Li Ning Co Ltd,
China's best known sportswear company, reported a
smaller-than-expected loss in the first half and said inventory
levels had returned to close to normal levels, fuelling hopes
that the beleaguered industry is finally on the mend.
Last week, larger domestic rival ANTA Sports Products
cheered investors with news that the value of its
order book grew for the first time in six quarters.
The sector is still grappling with massive oversupply after
China's six biggest sportswear companies, expecting a wave of
interest after Beijing hosted the 2008 Olympic Games, opened a
combined 12,300 stores between 2008 and 2011, an average of 11
But while ANTA had concrete numbers pointing to a recovery,
Li Ning gave less in the way of specifics and the company's
shares succumbed to profit-taking, falling about 4 percent,
compared with a 1 percent gain in the benchmark index.
Shares in Li Ning are flat so far this year, far behind a
more than 40 percent climb for ANTA.
Li Ning, which is backed by U.S. private equity firm TPG
Capital, said the worst was behind it as it expects to
start seeing returns from investments to help cut inventory,
adding that its annual net loss will be less than last year's.
"For the full year of 2013, we expect the company's
operating cash flow will continue to improve, along with our
distributors' profitability," Chairman Li Ning, an Olympic
gymnastics champion, said in a statement.
The company said its net loss totalled 184.2 million yuan
($30 million) for the January-June period. That was worse than a
44.3 million yuan profit in the same period a year ago but
better than an average forecast for a 241 million yuan loss from
three analysts polled by Thomson Reuters.
Li Ning, which raised eyebrows with a multi-million dollar
contract last October for Miami Heat's Dwyane Wade to promote
sports shoes but then failed to get many of those shoes to
stores, also said that Wade-branded sneakers would be available
in the United States in the next few months.
"Together with ANTA, Li Ning's results reconfirmed that the
sector is at bottom, but it is still early to be too optimistic
as we are still awaiting signs of improvement in consumer
sentiment on the mainland," said Linus Yip, chief strategist at
First Shanghai Securities.
"We will take to the sidelines and await hints of further
improvement in their store sales and of sustainablity in growth
of trade orders."
Li Ning, which is also backed by Singapore sovereign fund
GIC, said first-half revenue tumbled 24.6 percent to
2.91 billion yuan but its gross profit margin improved to 43.6
percent in the period, up from a restated 43.2 percent a year
The company, which lags ANTA's $3.3 billion market value at
$897 million, said the inventory value of its finished goods
fell to 1.23 billion yuan for the six month period, a 13 percent
decline from the end of December.
Same-store sales at directly owned shops rose 9 percent in
the first half but the company declined to make a forecast for
the second half of the year. It now operates 6,024 retail stores
in China at the end of June, 410 fewer stores than end-December.
Signs of a turnaround come just two months after Nike
disappointed investors when it posted flat orders in
China, a market many foreign companies see as a growth engine at
a time of sluggish demand in Europe and the United States.