Caixin
Mar 23, 2017 01:19 PM
BUSINESS & TECH

Li Ning Profit Surges on Retrenchment, E-Commerce

(Beijing) — Leading Chinese sportswear brand Li Ning Co. Ltd. said its operating profit more than doubled in 2016 after a major overhaul during the last few years, as it launched several major global e-commerce promotions to tap the international market.

Following a reorganization that saw the company close more than 2,600 stores between 2012 and 2014, the company founded by one of China’s most famous athletes is seeking to bolster its growth through e-commerce both at home and abroad.

Part of that effort will see it launch a series of online promotions next week in France, Spain, Russia, Ukraine and Israel for its best-selling sneakers. The March 28-30 campaign will offer the shoes at discounts of over 50%, and also cover other fitness and jogging products, in a bid to introduce consumers in those markets to the Li Ning brand, the company told Caixin.

Those promotions come just months after Li Ning began experimenting with overseas online sales by opening stores on AliExpress, the overseas-oriented arm of local e-commerce giant Alibaba Group Holding Ltd.

Li Ning is launching its international e-commerce drive as it reported its operating profit rose nearly 150% last year to 386 million yuan ($56 million), with revenue up by a more modest 13% to 8 billion yuan.

The international market still accounts for only a small fraction of Li Ning’s revenue. Overseas sales made up 2.6% of revenue last year, though that figure was up 0.4 percentage points from a year before, according to Li Ning’s latest report.

Apart from its latest online promotions, Li Ning now runs more than 100 traditional brick-and-mortar stores abroad. Among those, developing markets in Indonesia, Vietnam, India and the Middle East are doing the best, the company told Caixin.

The company went through a difficult period from 2012 to 2014, posting losses for all three years, before returning to profits in 2015. It attributes part of that turnaround to its newer focus on e-commerce, which has become extremely popular in China and has far lower costs than traditional retailing. E-commerce accounted for 14.3% of the company’s China sales last year, almost double a year before.

In November, the company started to try out overseas e-commerce by launching stores on AliExpress. Sales volume from that initiative’s first few months indicates that Russia, Spain, Israel and France are doing well, which is why those countries were picked for next week’s promotion, the company told Caixin.

Online sales in overseas markets will be a major focus of Li Ning this year, including launches of official pages on Facebook and Instagram, the company said.

Contact reporter Coco Feng (renkefeng@caixin.com)

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