Lining Net Profit Surge 196% "Chinese Element + Sports Gene" Strategy Obvious

In August 14th, Lining (demand area: 100-300 square meters, has entered 330 shopping centers, plans to open 300 this year) (02331.HK) released the interim results as of June 30, 2019, net profit surged 196% to 795 million yuan.

According to the financial report, from January 2019 to June, Lining's revenue grew by 33%, reaching 6 billion 255 million yuan, and the net profit of shareholders increased by 196% to 795 million, the net interest rate increased from 5.7% to 12.7%, the gross profit rate increased 1 percentage points to 49.7%, and the operating cash flow increased 107% to 1 billion 366 million. The basic earnings per share is 32.88 cents, not paying dividends.

　　 Integration of Chinese elements and sports genes boosts growth

Li Ning Co said that the main reason for the sharp increase in revenue was: through the effective integration of Chinese elements and their own "sports genes", the recognition of Lining brand increased significantly, and the revenues of all channels increased.

As the franchisee's confidence in Lining brand is enhanced, and the optimization of the overall channel structure of the group is taken into consideration, the group will transfer some of its original stores to distributors, and agrees that the distributors will set up big stores and fashion shops, so that the revenue of the franchisees will grow by 40%.

Affected by the transfer of some stores to dealers, the growth of direct sales revenue slightly slowed down, but still maintained a growth rate of over 10%.

E-commerce channels have been developing rapidly in recent years, and the proportion of revenue continues to rise. The growth rate is strong, showing a 30% increase. While earning a high income growth, the company will continue to pay attention to the change of channel inventory and keep it at a reasonable and healthy level.

In addition, we should focus on core categories, deepen the overall layout of marketing resources, accelerate diversified development of channels, enhance operational efficiency, and support and deepen Lining experience value. The main performance is to further integrate CBA professional league and other professional events and player resources, maintain the brand and product's continuous exposure, at the same time, combined with NBA's signing star CJ CJ's performance, create professional basketball product brand image, equipment, with the help of the national team cooperation, strengthened badminton product exposure. In addition, joint Disney and other big IP and tide card launch joint name, in order to attract more young consumers.

　　 Billion Lining: Conquer young people with fashion

Last year, Lining first broke tens of billions of times in 8 years, and the group revenue grew 18% to 10 billion 511 million yuan over the same period last year. Lining first appeared on the fashion week in New York in February last year and was seen as an important turning point in the history of the development of Lining's brand. The show lasted only 1 minutes, and many products were sold out in Tmall, which allowed Lining to harvest the train of thought and unexpectedly opened up the situation.

Then, last June's Paris men's wear week and the February New York fashion week's appearance became Lining's whip to enter the fashion. Fashion has gradually become a new recognition of this old sports enterprise.

In March this year, when Lining held the product launch of the fashion line 2019 autumn and winter in Shanghai, he first put forward the concept of Lining fashion line, and made clear the positioning of the product line aiming at the high-end market in sports fashion style.

Today, in June, when the fashion line was formally put forward, Lining released the latest 2020 spring summer series in Paris men's wear week. In this press conference, Lining's fashion has been advanced successfully. From the symbolic surface of multiple elements, he has gone deep into the dress culture and expressed himself in stylish language.

It is not hard to see that fashion has become a weapon for Lining to recover from the past. Moreover, the strategy of Lining sports is becoming clearer and clearer. The main idea is to enhance the fashion and tide brand of sports shoes and sportswear by strengthening the property of "China Lining".

From the first half of last year, Lining's clothing business income exceeded the core shoe business income, and this situation remained in the first half of 2019. This means that Lining's promotion of fashion and the "going out" plan are coming into effect.

Moreover, the sale of Lining fashion line on the domestic online and offline has also become an important boost for Lining's fashion strategy, which is also one of the important reasons for the growth in the first half of the year.

In addition, Lining's high-end fashion strategy has gradually affected the brand's channel strategy, with a second tier city as the main battlefield. But the high rent in the second tier cities limits their expansion.

Apart from Lining's main brand, Lining has also maintained a relatively prudent development strategy for the acquisition of international brands. In 2016, it acquired the sole right to operate the American Dance brand Danskin in mainland China and Macao. The brand is positioned as high-end women's fashion sports brand, so far no accelerated expansion has been made. Lotto, the Italy sports brand, and the French outdoor brand Aigle AI Gao, Lining, did not make any effort.

According to industry analysis, Lining still has strong growth. As Lining is still in the stage of performance improvement, its net interest rate has much room for improvement compared with other companies in the same industry, and its profitability will continue to improve in the future. Secondly, the company's children's clothing business Lining YOUNG has been developing rapidly in recent years, and is expected to become a new growth point of the company's future performance. In addition, the sports and fashion market has a strong response, and it is expected to form the Lining category of China to further enhance Lining's performance.

　　 Summary

With the opportunity to ascend the international fashion week, Lining unexpectedly gained a success. From then on, Lining began to focus on the needs of young consumers, and gradually came out of a new way of non-traditional sporting goods brand. Although the road ahead is long, Lining's path has provided a good inspiration for China's sports market.