Li Ning Company (2331) H1 2025 earnings summary

Executive summary

• Revenue grew 3.3% year-over-year to RMB14.817 billion for the six months ended 30 June 2025, with net profit at RMB1.737 billion and a net margin of 11.7%.

• Net profit attributable to equity holders declined 11% year-over-year, mainly due to a higher effective tax rate and a slight decrease in gross profit margin.

• Gross margin decreased by 0.4 percentage points to 50.0%, reflecting intensified promotional competition, channel mix changes, and deeper discounts.

• Operating profit margin was 16.5%, and EBITDA margin was 23.7%.

• Interim dividend of RMB33.59 cents per share declared, with a 50% payout ratio.

Financial highlights

• E-commerce revenue grew 7.4% year-over-year, now the largest contributor to growth; franchised distributor revenue up 4.4%, direct retail revenue down 3.4%.

• Footwear revenue grew 4.9%-5%, apparel revenue declined 3%-3.4%, and accessories/equipment revenue surged 23.7%-24%.

• Inventory turnover was 61 days, with total inventory up low single digits year-over-year; cash conversion cycle remained at 31 days.

• Basic EPS was 67.4 RMB cents, down 11% year-over-year.

• Net operating cash inflow was RMB2.411 billion; cash and equivalents rose to RMB11.8 billion.

Outlook and guidance

• Focus remains on product innovation, channel optimisation, digital transformation, and leveraging Olympic partnerships.

• Plans to accelerate growth in women’s, outdoor, and youth sports, and deepen cooperation with the Chinese Olympic Committee.

• Management remains cautious but optimistic, aiming for sustainable long-term growth through efficiency improvements and market share gains.

• Second half expected to see higher expenses, especially Olympic sponsorship and marketing.