BEIJING — Li Ning, China's homegrown sportswear giant, said Monday it narrowed its full–year losses and saw lower sales amid a restructuring overhaul to streamline its retail business.
The company posted a loss of 392 million renminbi, or $63.27 million at average exchange rates, compared with a loss of 1.98 billion renminbi, or $313.24 million, a year ago. Sales for the 12 months ended Dec. 31 declined 12.8 percent to 5.8 billion renminbi, or $936.12 million, as the company closed hundreds of stores and reduced inventory nationwide. All dollar figures are based on average exchange rates for the time periods to which they refer.
Earnings before interest, taxes, depreciation and amortization came in at 26 million renminbi, or $4.2 million, compared with a loss of 1.38 billion renminbi, or $218.32 million, the previous year.
After a quick and wide-scale expansion leading up to the 2008 Beijing Summer Olympics, the company lost its footing in the Chinese consumer market and failed to attract a large international following. As part of the restructuring, the brand closed 519 retail stores last year. Li Ning still has 5,915 retail stores across China.
Li Ning, the Olympic gymnast who founded the company and now acts as executive chairman, said the brand is making a successful transition in a fast-changing market.
“Chinese consumers have become more sophisticated and expect better quality and value, as well as great performance in their sportswear," Li Ning said. "We are responding to the needs of our customers - by promoting a sports culture and combining sports functionality and fashionable design in our products, we enhanced the overall experience for Li Ning consumers that’s quickly resonated with the rapidly growing middle-class consumers."
Still, Li Ning's executive vice chairman and interim chief executive officer Jin-Goon Kim warned that market uncertainties could pose challenges for the company going forward.
"Negative financial impact from the turnaround is expected to be limited in 2014 as recovery in high margin new products continues, but the risk remains with the performance of the remaining weak channel partners and disposal progress of old inventory, and market uncertainties could pose challenges to the continued progression of our transformation," he said.
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