Li Ning sees decline in H1 revenues, profit margin

HONG KONG - Homegrown Chinese sport brand Li Ning Co Ltd said it expected to see its revenues decline 5 percent in the first half of 2011 from a year ago as it moves to revamp distribution channels.

In a filing to the Hong Kong bourse on Thursday, it said same-store sales growth maintained a low single-digit pace from January to June, with the total number of Li-Ning brand stores at 8,163. It did not give comparison figures.

Li Ning said its gross profit margin was expected to decline by 1 percentage point due to a new wholesale discount policy and increases in raw material costs.

Profit margin attributable to shareholders is expected to decline to 6-7 percent in the first half from 12.9 percent a year ago, it said.

Due to expected significant increases in raw material costs in the second half of 2011, Li Ning forecast gross profit margin for the period would decrease from last year.

Profit margin attributable to shareholders for the full year 2011 is expected to decline by about 1-2 percentage points compared with the first half, it added.

Li Ning also said order value for the fourth quarter of 2011 rose more than 5 percent year on year, though order volumes declined at a high single-digit rate. Average retail prices for apparel and footwear products increased over 10 percent.

Shares of Li Ning are down 16.9 percent so far this year, against a 2.2 percent fall in the benchmark Hang Seng Index.