This round of stock price surge is an affirmation of Li Ning’s transformation effect over the years, especially this year.
It’s time to re-examine this veteran sports brand.
In mid-October, Li Ning’s share price continued to hit a record high, reaching a record high of HK$27.65. Since the beginning of this year, Li Ning’s share price has doubled, surpassing Anta to become the best performing stock in the MSCI Asia Pacific Index.
Reviewing Li Ning’s stock price since 2010, you will find that this is a symmetrical open-up parabola. It took nearly a decade to go from low to boost.
Before 2012, Li Ning has been a domestic brother, but due to its high-end failure, product pricing failure and other reasons, it has fallen into a situation of internal and external difficulties. Since 2012, with the Chinese sports brand collectively caught in an inventory crisis, Li Ning’s domestic status as a brother has given Anta, and has not surpassed Anta until now.
From 2012 to 2014, Li Ning lost more than three years. In 2014, founder Li Ning was ordered to return to the company and made drastic changes to the company. During the period when the founder Li Ning returned, Li Ning launched the “China Li Ning” series in line with the trend of the national tide, launched the children’s fashion sports brand “Li Ning Young” and achieved good results, vigorously developing e-commerce and direct sales stores. Reduce unnecessary marketing expenses, strengthen management of supply chains and inventory, and reduce inventory backlogs.
In general, the idea of founder Li Ning is to open source and reduce expenditure. This series of combination punches also played a role.
Founder Li Ning
Li Ning has turned losses into profit in 2015. The average annual compound growth rate of net profit in 2015-2018 is nearly 500%, and the compound annual growth rate of income is 11%, exceeding the domestic average.
From the performance of stock prices and financial reports, Li Ning’s survival in the Jedi has been successful. This round of stock price surge is an affirmation of Li Ning’s transformational effects over the years, especially this year. It is also a “face” for the short-selling short-selling institutions in 2018.
Li Ning’s stock price changes
Fighting, Active Transformation
The transformation of Li Ning can be divided into two stages. The first phase was 2008-2012, and the transformation actually failed. There are many reasons. For example, Li Ning overestimated his brand appeal. He blindly raised the price and hit the high end in the absence of his own R&D and design capabilities. The result was defeated by Adi and Nike. For example, although the slogan of embracing the 90s was proposed, it did not understand the consumption habits after the 90s, and lost the market after 70s and 80s.
Since 2014, founder Li Ning returned and served as the president. Li Ning re-emphasized the slogan “Everything is possible” and clearly opened up a series of reforms after clearing the positioning of “Internet + Sports Life Service Provider”. Judging from the recent developments, the speed of Li Ning’s reform is getting faster and faster, and it’s quite a quick sign that it’s not a saddle.
Li Ning’s reforms are multifaceted, including channels, manufacturing, and product structure.
From the perspective of channels, Li Ning has now solved the problem of over-reliance on dealers. This is an important reason why Li Ning was in trouble. Being too close to the dealer, too far away from the consumer, unable to understand the consumer’s needs in time, coupled with the company’s crazy crushing of the performance of the beautification, resulting in the inventory crisis of the year.
In order to solve this problem, Li Ning gradually shifted its sales focus from dealers to self-employed, and actively embraced the tide of e-commerce.
Li Ning Store
In terms of channels, Li Ning’s self-operated retail sales have achieved remarkable results. The proportion of self-operated retail sales increased from 12.8% of total retail sales to 29.8%, while the proportion of dealer store sales has fallen below half. Self-employment and distribution have made Li Ning not only able to understand consumer demand and launch new products in a timely manner, but also enable Li Ning to reduce costs to a certain extent and grab the market with other brands.
In terms of e-commerce, from the 2019 Q3 earnings report released last month, Li Ning’s overall retail growth rate is 10%-20%, while e-commerce platform retail growth rate is 50%-60%. It can be seen that Li Ning’s retail growth is mainly due to the growth of e-commerce, and the founder Li Ning’s strategy has been well implemented.
FromIn terms of manufacturing, Li Ning has also corrected the problems that have existed but have not been discovered in previous years.
In May of this year, the Guangxi supply base invested by Li Ning Group officially started. This is the first time that Li Ning has set up a self-built production plant since its establishment in 1990. It is reported that the production capacity of the Guangxi plant is about one-third of the estimated production of Li Ning. .
Before the production of the Guangxi plant, Li Ning’s way of producing products has always been outsourcing. Although outsourcing can reduce production costs, it is not conducive to the company’s control of products, and it is not conducive to shaping the brand. This is one of the reasons why Li Ning was in trouble.
Before the start of the Guangxi plant, Li Ning Group has set up R&D centers and design centers. After the production of the Guangxi plant, Li Ning will be able to open up research and development and manufacturing, and strengthen the control of the brand.
The strategy of single-brand misplacement development also showed good results. Li Ning launched the national tide series products “China Li Ning” and “Enlightenment” won a good market response. The “China Li Ning” series belongs to Li Ning’s high-end national tide products, which currently accounts for about 10% of Li Ning’s total sales. The products of Li Ning’s main brand have adjusted their product positioning since 2013, giving up the impact of high-end, re-taking the mid-end product line, paying attention to cost-effectiveness, and regaining a lot of consumers’ favor. In addition, the children’s sports fashion brand “Li Ning Young” performance is not bad, this year has increased by more than 80 points of sales, has exceeded the “Li Ning” brand.
Comprehensively, the overall strategy of reform proposed by Li Ning after the return of the “single brand, multi-channel, multi-category” has been well implemented, although “single brand” “This strategy and the peers seem to be somewhat out of place, but also attracted some people’s doubts, but from the current point of view, the results are good and have been recognized by the market.
Hug the tide and hit the high end
In recent years, Li Ning has not only emerged from the predicament, but also ushered in a period of rapid growth. Li Ning’s biggest competitor, Anta, is also developing at an extremely fast pace. At present, Anta+FILA double-brand revenue is more than twice that of Li Ning. Anta’s rapid growth is largely due to the high-end product FILA. In the high-end market competition, Li Ning and Anta have taken two different paths.
A series of FILA products clearly reflect the brand of internationalization, and Li Ning chose to embrace the national tide and compete with FILA in the face of FILA.
In 2018, a report by CBNData pointed out that the contribution rate to the national tide after 90s and 00s was over 80%, which was 450% compared with 2017. It can be seen that with the gradual entry into the society after the 90s and 00s, the winds of the national tide have become more and more fierce.
Since the establishment of the “China Li Ning” brand, “China Li Ning” has launched a “less”There are a number of urban cultural themes in the trend of not entering Sichuan, “Youth Chang’an”, not only have distinctive regional cultural characteristics, but also cater to the fashion consumption needs of young people.
2018, Li Ning’s product “China Li Ning” and other successively boarded New York Fashion Week and Paris Fashion Week. After the fashion week, China’s Li Ning’s sales response on Tmall was very good. The fans of Tmall’s flagship store have reached more than 16 million so far. Online has also won the crowds of consumers. Li Ning Group plans to China’s Li Ning store opened to 100-120.
It can be said that Li Ning has been very successful in embracing the national tide. Through the development of “China Li Ning”, Li Ning has achieved the promotion of the brand image and truly embraced the young people.
But under the success, there is not a little worry. The “national tide” is also a trend after all. Since it is a trend, its periodicity is certainly difficult to avoid. In 2012, Li Ning also attached importance to originality. To go to China’s own style, the result was defeated by the wave of “international model” and did not grasp the consumption habits after the 90s.
How the future trend will go, this is a very difficult thing to judge. It is not enough to rely solely on Guochao products. Guochao products can be loved by young Chinese, but it is hard to be loved by foreigners with different cultural habits. To counter the cyclicality of the trend, we must embrace both the “national tide” and the “international norm.”
China Li Ning Store
From the current Li Ning’s overseas sales revenue, Li Ning’s internationalization process is far behind Anta. In the first half of last year, Li Ning’s overseas sales revenue was nearly 100 million yuan. However, in the first half of this year, Li Ning’s overseas sales revenue was only over 73 million, which did not increase. It can be seen that although Li Ning has been on the stage of overseas fashion week, and sits on the big IP of Disney and Wade, the effect is mainly in the domestic, and the impact on the international market development is minimal. It can be said that the overseas market is currently a big short board of Li Ning.
In any case, Li Ning’s transformation has been on the road and has not been completed yet. Although it has achieved great success, Li Ning is still far away from the real “tidal brand Li Ning”. For Li Ning, the biggest challenge is to achieve the parallelization of internationalization and national tides while improving R&D design capabilities.