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China's Li Ning Expects To End Bad Run, Break Even For 2015

Li Ning, the "struggling" Chinese sportswear company that is one of the mainland’s "best known brands," said that it will break even for '15, "leaving behind three years of annual losses," according to Patti Waldmeir of the FINANCIAL TIMES. In a filing to the Hong Kong stock exchange, the company said it expected to "record an approximate break-even in terms of profit and loss attributable to the equity holders" in the year that ended Dec. 31, "principally due to an increase in both the sales revenue and gross profit of the group and a decrease in expense ratio." Li Ning has spent most of the past three years "trying to restructure its business." The company attributed the improved performance to "enhanced direct retail operating efficiency and long-term relationships with channel partners, and expanded ecommerce business." Shanghai-based China Market Research's Ben Cavender said, "It looks like their efforts to shut down unprofitable stores and focus on inventory with better sales and better margins are finally paying off." A recovery in the broader China sportswear market "also appears to have played a role, retail analysts said." China-based footwear and apparel analyst Ma Gang noted that "the whole industry is now on the upturn ... and Li Ning has done a lot of work [to stem its losses]." Chen Ke, a Shanghai-based retail partner at Roland Berger, projects that the Chinese sportswear market will "maintain a 10 per cent growth rate in the next three years" while Li Ning itself "has improved efficiency after a shift ... to opening more of its own stores" (FT, 1/6).

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