Li Ning Group's net profit declines for three consecutive quarters. Co-CEO Qian Wei: Future performance growth will rely on three main strategies | On-the-scene coverage of the earnings briefing

Ask AI · How can the three major growth levers specifically improve Li Ning store efficiency and new channel expansion?

《Science and Technology Innovation Board Daily》March 20 report (Reporter Xu Cihao) “The company is walking down a difficult but correct path.” At Li Ning Group’s 2025 full-year performance briefing held today, Li Ning Group’s Executive Director and Co-CEO Qian Wei candidly said this during the meeting.

He also made it clear that Li Ning Group’s future revenue growth will mainly rely on three key levers: quality improvement and efficiency enhancement in core professional product categories, improving store efficiency across more than 7,600 existing stores, and scaling up the rollout of new tracks and new channels such as outdoor and the Golden Label.

The full-year financial results for 2025 released the night before show that during the reporting period, Li Ning Group achieved revenue of 29.598 billion yuan, up 3.2% year over year. Attributable net profit was 2.936 billion yuan, down 2.6% year over year, and net profit margin was 9.9%. This performance indicates that Li Ning has been stuck in an operating pattern of increasing revenue but not increasing profit for three consecutive years.

A reporter from 《Science and Technology Innovation Board Daily》 noted that Li Ning’s profitability side has faced pressure for many years. From 2022 to 2024, the company’s attributable net profits were 4.064 billion yuan, 3.187 billion yuan, and 3.013 billion yuan, respectively, steadily declining year by year.

In 2025, Li Ning’s overall gross margin was 49.0%, down slightly by 0.4 percentage points compared with the same period in 2024. In its financial report, Li Ning explained that the decline in gross margin was mainly driven by adjustments in channel mix, increased market competition in direct-operated channels, and the company’s phased increase in discounting, among other factors. Against the backdrop of both industry inventory pressure and more rational consumption, sportswear brands generally use discounts to boost sell-through at the retail end, and Li Ning was no exception, which in turn compressed overall profit space.

From the perspective of revenue composition, all three of Li Ning’s business segments maintained growth. Among them, footwear revenue was 14.65 billion yuan, up 2.4%, accounting for 49.5% of total revenue; apparel revenue was 12.33 billion yuan, up 2.3%, accounting for 41.6%; and equipment and accessories revenue was 2.62 billion yuan, up 12.7% year over year, becoming the fastest-growing sub-segment.

On the sales channel front, there is currently a clear divergence: franchise/distributor and e-commerce channels are holding up strongly, while direct-operated channels are proactively shrinking. In 2025, revenue from franchise/distributor channels grew 6.3% year over year, and the revenue share increased to 46.6%, continuing to serve as the group’s core revenue pillar. E-commerce channel revenue grew 5.3% year over year, and accounted for 29.5%.

By contrast, revenue share from direct-operated channels fell to 22.5%, showing relatively more pressure. This change is directly related to Li Ning’s proactive optimization of its store network. By the end of 2025, Li Ning’s core brand direct-operated stores were net down by 59 compared with the beginning of the year. The company improved efficiency and quality of its direct-operated system by closing down low-efficiency stores, optimizing commercial-area layouts, and other measures.

At the same time, the kidswear segment Li Ning YOUNG maintained an expansion trend. The number of stores at year-end reached 1,518, a net increase of 50 stores compared with the end of 2024, reflecting the group’s strategic tilt toward kidswear—a high-potential sub-market.

At today’s performance briefing, Qian Wei reiterated that Li Ning adheres to its core operating strategy of “one brand, multiple categories, multiple channels.” In terms of building a multi-channel layout, this year the company will trial new types of channels through various models. These will differ from traditional merchandise stores, aiming to create new store formats with differentiated positioning and value. At present, the related store formats are still in the planning, design, and rollout process. Some new-channel formats are expected to be rolled out in phases in the second half of 2025, while other formats will require a longer incubation cycle.

In overseas markets, the financial report shows that in 2025, Li Ning’s China market revenue was 29.162 billion yuan, and revenue from other regions was 427 million yuan, down 19.5% year over year from 530 million yuan in 2024, accounting for only 1.4% of total revenue.

Notably, in October 2024, Li Ning announced that its indirectly wholly owned subsidiary LN Co and Founder Co, which is wholly owned by Chairman Li Ning, jointly established a joint venture with HongShan Venture and HongShan Motivation under Sequoia China. The total share capital was 200 million Hong Kong dollars. Among them, LN Co held 29%, Founder Co held 26%, and the Sequoia China-related entities collectively held 45%.

In that announcement, Li Ning said that bringing in Sequoia China is intended to accelerate the development of overseas business by leveraging its cross-border resources and global operating experience. However, according to what Qian Wei disclosed at today’s performance briefing, starting in 2025, Li Ning’s overseas business has gradually been consolidated into this joint venture, and the financial data has also been separated from the listed-company reporting system. Therefore, overseas revenue appears to decline on the financial statements, but actual international business revenue is still growing.

“The CEO of the joint venture has already assumed the role in the second half of 2025, and the overall business is still in a transition period. The specific overseas strategic layout, operating plans, and so on will be clarified in stages after the joint venture’s management team further improves.” Qian Wei said at the performance briefing.