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SBD Global/August 24, 2012/Finance

China's Li Ning Shares Fall; May Produce Full-Year Loss

Li Ning, "the struggling Chinese sportswear retailer that is one of the mainland’s best known homegrown brands," has warned it may post a full-year loss due to inventory overhang and slowing domestic economic growth, according to Waldmeir & Tsui of the FINANCIAL TIMES. Its shares fell 3.8% in Hong Kong on Thursday, compounding a 4.5% fall on Wednesday, "as investors appeared to be losing patience with the company’s assurances it has found a way to reverse the two-year slide in its fortunes." Li Ning reported an 85% drop in first-half net profit to RMB 44.3M ($7M). One reason for the projected full-year loss is that spending on the recently concluded London Olympics "will be booked primarily in the second half." Shanghai-based China Market Research Founder Shaun Rein said, "Li Ning's poor performance has more to do with its own strategic missteps rather than an overall slowdown of the Chinese market" (FINANCIAL TIMES, 8/23).
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