Li Ning, the Chinese sportswear brand, warned of a “substantial decline” in this year’s profits, highlighting difficult conditions for some Chinese companies as the economic slowdown drives mainland consumers to seek value from foreign retail brands.
Li Ning’s shares fell to a six-year low in Hong Kong yesterday after the company issued a statement to the stock exchange last night saying that 2012 profits would be hurt by weaker sales, higher marketing costs, an impairment loss on a licensed brand and interest on convertible bonds.
Retail market analysts said Li Ning, which is backed by TPG Capitaland Singapore sovereign wealth fund GIC, continued to suffer from unclear brand positioning and an inventory glut, as well as generic problems assailing most retail brands in China, such as rising marketing, labour and other costs.