LI NING (02331) mid-term performance release in 2025: Maintain stability, income increased by 3.3% to 14.82 billion

Thursday, LI NING Limited (02331) announced the group's interim performance for the six months ending June 30, 2025. Financial Performance In the first half of 2025, the group steadily strengthened its operational foundation, actively prepared for business development, and maintained steady revenue growth. During the period, the group's revenue reached 14.817 billion RMB, up 3.3% compared to the same period in 2024 (14.345 billion RMB in the first half of 2024). Gross profit was 7.415 billion RMB, up 2.5% compared to the same period in 2024 (7.236 billion RMB in the first half of 2024), with an overall gross profit margin of 50.0%, down 0.4 percentage points from the same period last year (50.4% in the first half of 2024). During the period, the group's attributable net profit to equity holders was 1.737 billion RMB (1.952 billion RMB in the first half of 2024); the attributable net profit margin to equity holders was 11.7% (13.6% in the first half of 2024); the return on equity to equity holders was 6.5% (7.8% in the first half of 2024). Basic earnings per share were 67.43 cents RMB (75.80 cents RMB in the first half of 2024). The Board of Directors decided to distribute an interim dividend of 33.59 cents RMB per share for the six months ending June 30, 2025 (37.75 cents RMB in the first half of 2024), with a dividend payout ratio of 50%. In terms of cash flow management, the net cash generated from operating activities was 2.411 billion RMB during the period (2.730 billion RMB in the first half of 2024). As of June 30, 2025, the cash and cash equivalents (including bank cash and cash on hand, as well as fixed deposits not exceeding three months from the original maturity date) were 11.798 billion RMB, an increase of 4.299 billion RMB from December 31, 2024. Adding back the amount recorded in bank time deposits, the cash balance was 19.190 billion RMB, a net increase of 1.050 billion RMB from December 31, 2024. The decrease in retail income led to a decrease in retail collections, and an increase in tax payments resulted in a decrease in net cash generated from operating activities compared to the same period last year; the redemption of fixed deposits at maturity significantly increased the net cash generated from investing activities. The group will continue to focus on cash flow management to ensure long-term stable development. Business Overview In the first half of the year, the group continued to solidify its core strategy of "single brand, multiple categories, multiple channels," and made steady progress in key areas such as product upgrades, brand marketing, and channel optimization. With years of deep cultivation in the professional sports field, relying on excellent product and brand power, the group successfully signed a contract to become the official sports apparel partner of the Chinese Olympic Committee and the Chinese sports delegation from 2025 to 2028. During the reporting period, the group used the new Olympic identity marketing theme of "Chinese Glory, LI NING Companion" as the core pivot point, strengthened the brand's professional image as a strong supporter of Chinese sports, and continued to consolidate the core positioning of a professional sports brand. In terms of professional products and marketing, the group focuses on six core categories including running, basketball, training, badminton, table tennis, and sports leisure, actively seizing market trends, expanding into new sub-categories like outdoor sports, tennis, and pickleball, continuing to empower product upgrades with technological innovation, increasing the layout of professional sports resources, and starting from three core points: strengthening professional sports mentality, showcasing sports fashion aesthetics, and inheriting Chinese cultural values, actively promoting differentiated brand advantages through diverse and comprehensive marketing activities, enhancing brand awareness and lovability, and continuously expanding brand influence. In terms of channels, the group actively constructs a multidimensional channel network, systematically promotes market coverage deepening and operational efficiency upgrades. In high-level markets, through deepening strategic coordination with top commercial entities and leading outlet projects, the group promotes innovative store planning and layout; in emerging markets, the group implements deep expansion, optimizes channel level layout to expand market share. As of June 30, 2025, LI NING sales points (including LI NING brand and LI NINGYOUNG) totaled 7,534, a net decrease of 51 from December 31, 2024. In retail operations, the group focuses on systematically building a high-level market operation model and distribution business model, by optimizing channel structure, adjusting store product mix, planning consumer interactive activities, strengthening brand mind penetration, and improving product operation efficiency. In addition, the group focuses on optimizing store visual presentation, marketing promotion quality, upgrading property cooperation efficiency, and strengthening professional service capabilities. The group also strengthens efficient cooperation between headquarters and terminals, continuously improves retail process norms, and prepares fully for the new store expansion and retail capability enhancement during the Olympic cycle. In terms of new retail business, the group comprehensively deepens the construction of the new retail business system, with digitalization as the core, aiming to drive the overall improvement of business efficiency. In terms of e-commerce operations, facing a challenging market environment, the group adheres to a steady business strategy, through the linkage of Wuxi Online Offline Communication Information Technology Co., Ltd., the creation of exclusive marketing IP, and precise layout of major promotional events, continuously boosting operational efficiency and becoming an important driver of business growth. In terms of supply chain, the group continues to promote the deep optimization and strategic upgrading of the supply chain, focusing on quality control, delivery assurance, cost optimization, and sustainable development, and has achieved significant results. During the period, the group made breakthrough progress in flexible supply capabilities, successfully expanded to e-commerce exclusive product lines, and established a rolling replenishment system and cross-channel collaborative mechanisms to maximize market demand satisfaction. In addition, the group deeply integrates sustainable concepts into supply chain practices, effectively promotes the landing of green products, and exceeds the target for orders of environmentally friendly products. In the first half of the year, the group vigorously promoted the strategic construction of the logistics system, focusing on comprehensive enhancement of logistics efficiency and precise optimization of cost control, around the three core directions of channel integration, digital upgrading, and automation optimization, achieving comprehensive improvement in logistics efficiency and cost control. The group initiated the full-channel logistics project, efficiently integrated resources from Wuxi Online Offline Communication Information Technology Co., Ltd., improved the efficiency of goods circulation and warehousing operations, and effectively reduced logistics costs. The launch of the Nanning center warehouse marked the completion of the group's national logistics warehousing network layout, further enhancing market responsiveness and core competitiveness. In terms of children's clothing business, LI NINGYOUNG steadily developed in areas such as product optimization, channel construction, retail efficiency improvement, and brand marketing, focusing on enhancing the brand's professional image and market share. LI NINGYOUNG continues to exert efforts in product optimization, promotes product research and development and IP creation, helping core categories achieve breakthrough growth. In terms of channel construction, LI NINGYOUNG focuses on expanding coverage and improving channel quality, implementing multi-channel incremental strategies, on the basis of meticulous cultivation in core markets, strategically expanding into emerging markets and strengthening outlet channel layout. In terms of marketing, LI NINGYOUNG fully utilizes the group's resource advantages, closely linking with basketball, running, and other categories, providing consumers with a rich and diverse brand experience through a variety of marketing activities. As of June 30, 2025, LI NINGYOUNG sales outlets totaled 1,435, a net decrease of 33 from December 31, 2024. Outlook Looking to the future, the group will steadfastly execute the core strategy of "single brand, multiple categories, multiple channels," uphold the core values of "serving the public with sports spirit," and continue to refine the "LI NING style experience value." 1. Building competitive product advantages: The group will continue to rely on the LI NING technology innovation platform to optimize product structure, strengthen diversified layouts under the single brand strategy, and create differentiated competitive advantages. The group will focus on the deep integration of technology and fashion, create a sports product matrix that combines functionality and trend aesthetics, meet consumers' full-scene needs, actively seize market shares in various segmented markets. At the same time, the group will accelerate its layout in high-growth potential markets, focus on breakthroughs in women's sports, outdoor equipment, and youth sports equipment, seize market opportunities, and cultivate new business growth points. Furthermore, the group will increase research and development investment to enhance product competitiveness, strengthen long-term competitive advantages through technological barriers. 2. Deepening cooperation efficiency with the Chinese Olympic Committee: The group will provide comprehensive support to the Chinese sports delegation in international competitions through high-quality products and efficient services. In addition, the group will further launch marketing activities around this top-level cooperation, plan to release the Milano 2026 Winter Olympics awarding ceremonies in the second half of the year, and launch Winter Olympics-themed marketing communications, continuing to deepen LI NING's professional sports image. 3. Focus on improving business quality and efficiency: The group will synergistically strengthen efforts in channels, products, and supply chain, achieving a double improvement in business quality and efficiency. Channel efficiency upgrades will focus on breakthroughs in both offline and online channels. Offline efforts will be made to enhance high-level market efficiency, strengthen distribution capabilities, and deep cultivation in emerging markets to improve terminal competitiveness; online efforts will release sales potential through holistic ecological governance, integrated brand marketing, maximizing sales potential of Wuxi Online Offline Communication Information Technology Co., Ltd. Channels. On the product side, by optimizing the entire chain system and improving the accuracy of omnichannel product planning, the group will achieve significant optimization in supply-demand matching, flexible production, and inventory turnover. The supply chain will focus on cost control, quality improvement, and delivery time, deepen strategic integration with product and commodity businesses, and enhance overall efficiency. 4. Strengthening foundation to drive growth: To solidify the foundation for business development, the group will focus on improving core support in talent drive, financial governance, and digital empowerment. In terms of talent drive, the group will build a talent team based on strategic business needs, continually optimize organizational performance, and construct a flexible and efficient operating structure. In terms of financial governance, the group will strengthen target control, establish more rigorous budget management and risk control mechanisms, enhance financial transparency and fund utilization efficiency, provide stable financial support for strategic implementation. In terms of digital empowerment, the group will deeply apply cutting-edge AI technology, build a digital operation support system, enhance market insight and consumer analytics capabilities, and lay a solid foundation for high-quality development. Mr. LI NING, chairman and co-CEO of the group, concluded: "Looking forward to the second half of the year, driven by policy promotion, technological iteration, and changes in consumer demand, the industry as a whole has the potential for high-quality growth, with a mix of opportunities and challenges. We will maintain a cautious attitude, continue to solidify the business fundamentals, closely monitor market dynamics, actively capture and seize possible structural opportunities, and drive the group to achieve long-term sustainable growth through a series of strategic initiatives, striving to become the preferred professional sports brand for consumers."