Sports giant Li-Ning sold 29.5 billion yuan in a year

Can investing in AI and professional sports tracks boost Li Ning’s net profit?

Li Ning sold 29.598 billion yuan in a year, setting a new record for revenue.

On March 19, Hong Kong-listed Li Ning released its 2025 performance report. The financials show that in 2025, the company achieved revenue of 29.598 billion yuan, up 3.2% year-over-year; operating cash flow of 4.852 billion yuan; net profit attributable to shareholders of 2.936 billion yuan; gross profit margin of 49%, down 0.4 percentage points year-over-year.

Notably, this is Li Ning’s fourth consecutive year of declining net profit.

Despite this, the market did not react negatively. On March 20, Li Ning’s stock opened higher, with intraday gains exceeding 13%; by the close, it rose 8.56%, with a total market capitalization of HKD 55.4 billion.

In fact, the increase in revenue but decline in profit mainly stems from the rapid expansion of offline stores driven by the “Guochao” trend from 2020 to 2022. As market conditions changed, Li Ning’s inventory levels rose. To clear stock, starting in 2024, Li Ning began reducing store numbers and increasing promotional efforts; coupled with the cooling of the “Guochao” trend, the company’s high-margin product capabilities faced challenges, making the revenue growth without profit growth understandable.

Li Ning management stated that the core of operations is to ensure gross profit margin and that excessive discounts to pursue scale are not acceptable.

From the financial report, targeted adjustments by Li Ning have begun to show results. Overall, affected by the footwear and apparel market environment, Li Ning’s stock price has hovered at the bottom for three years. Compared to Li Ning, Anta Sports’ market performance is somewhat better, mainly influenced by market preferences.

Kanjian Finance believes that maintaining a certain level of revenue growth in the current market environment is already quite an achievement. As consumer markets recover, an increase in gross profit margin is highly likely.

Additionally, despite declining net profit, Li Ning continues to maintain a high dividend payout strategy. According to the announcement, the Li Ning board recommends a final dividend of 23.36 cents RMB per ordinary share for the year ending December 31, 2025; combined with the interim dividend of 33.59 cents RMB per share paid in September 2025, the total annual dividend amounts to 56.95 cents RMB per share, with a payout ratio of 50%.

The situation of rising revenue but declining profit may improve

Currently, the global footwear and apparel market has shifted from an expansion phase to a stock competition phase, with leading companies moving from full-scale competition to differentiated competition.

Li Ning has chosen to intensify its focus on professional sports tracks, strengthening its brand image as a professional sports brand. Currently, Li Ning still adheres to a “single brand, multiple categories, multi-channel” strategy, but with a more focused layout. From Li Ning’s strategy, it is clear that the company has increased strategic investments in top-tier professional sports resources.

Specifically, in January 2025, Li Ning reclaimed the status of “Official Partner of the Chinese Olympic Committee” from Anta; in April, it replaced Xtep as the official strategic partner of the 2025 Beijing Half Marathon. Regarding regaining the Chinese Olympic Committee partnership, Executive Director and Co-CEO Qian Wei said this was a milestone event to be proud of for the brand. Concerning external attention on marketing investment and conversion, Qian Wei stated that top-tier event sponsorships are not aimed at immediate sales conversion but focus on medium- to long-term brand building, aiming to strengthen consumer recognition of Li Ning as a “comprehensive professional sports brand” and to solidify its core categories such as running, basketball, table tennis, and badminton.

Qian Wei admitted that continuous event sponsorships do put short-term financial statements under some pressure, but the group will offset this by improving other operational efficiencies to maintain healthy and stable finances. In the future, Li Ning will continue to increase related investments to fuel long-term business growth.

Financial data shows that this strategy has already yielded some results.

From the revenue perspective, the group’s performance has achieved steady growth, mainly due to three reasons:

First, in 2025, the franchise dealer channel continued to serve as a core pillar, with revenue steadily increasing by 6.3% year-over-year, further increasing its share to 46.6%.

Second, the group continued to deepen its online marketing layout, focusing on mainstream e-commerce ecosystem cooperation while also exploring new e-commerce growth opportunities, with e-commerce revenue up 5.3% year-over-year.

Third, adjustments in direct store layout and shifts in consumption scenarios have put pressure on retail channels. The company will continue to precisely focus on consumer needs, deepen user engagement, optimize store matrix, and achieve deep integration and collaborative growth of online and offline channels.

By product category, in 2025, Li Ning’s footwear revenue was 14.65 billion yuan, a slight increase; apparel revenue was 12.33 billion yuan, also a slight increase; equipment and accessories revenue was 2.62 billion yuan.

In terms of channels, revenue from franchise dealers in China reached 13.77 billion yuan, direct channels contributed 6.65 billion yuan, and e-commerce channels brought in 8.74 billion yuan.

Notably, Li Ning successfully launched an outdoor standalone store “COUNTERFLOW” and partnered with IPs like the Palace Museum. As of December 31, 2025, Li Ning’s sales points numbered 7,609, a net increase of 24 stores year-over-year; in e-commerce, core IP products such as “Chasing Wind,” “DLO,” “ULTRALIGHT,” and “Blade” performed well, ranking at the top in sales and reputation across various segments.

In terms of cash flow, in 2025, the group’s net cash generated from operating activities was 4.852 billion yuan; net cash flow was 19.97 billion yuan, up 1.81 billion yuan year-over-year; inventory turnover period was 64 days, indicating high financial safety.

Looking ahead to 2026, Li Ning’s management provided a relatively optimistic performance outlook.

Li Ning Vice President and CFO Zhao Dongsheng stated that the company expects high single-digit growth in revenue and a high single-digit net profit margin in 2026. Kanjian Finance believes that as market conditions improve, net profit levels will also rebound accordingly, and the phenomenon of revenue growth without profit growth is expected to see some reversal in 2026.

Betting on a new Olympic cycle

According to the National Bureau of Statistics, in 2025, retail sales of clothing items by units above designated size increased by 2.8% year-over-year; large-scale clothing companies saw revenue decline by 12.67% and profits drop by 27.34% year-over-year.

Performance of leading brands like Li Ning and Anta also reflects these figures. However, both brands performed better than the industry average.

Furthermore, as we entered 2025, the popularity of professional sports and outdoor categories continued to rise, prompting Li Ning to allocate more resources to major events and top-tier professional sports fields.

In 2025, Li Ning launched new flagship stores and a new Glory Gold series, first integrating the Chinese Olympic Committee logo with the Li Ning brand logo on products. During the Milan Winter Olympics, it released co-branded products for the Chinese sports delegation with zero time lag, turning high-traffic international top events into consumer momentum.

It should be noted that Li Ning’s cooperation cycle with the Chinese Olympic Committee is long-term, and the Olympics serve as a key leverage point for both professional and mass consumer markets, bringing significant brand exposure.

From 2026 to 2028, as part of the new Olympic cycle, Li Ning will provide equipment support for the Chinese delegation, and the Milan Winter Olympics has already shown preliminary brand exposure effects, which may help increase market share.

Kanjian Finance believes that despite the overall industry downturn, Li Ning has maintained stable revenue growth, demonstrating solid operational foundations. As the new industry cycle approaches, it is expected that Li Ning’s operations will continue to develop with high quality, and its net profit level will improve significantly.

Shenwan Hongyuan issued a research report stating that in January and February 2026, domestic demand and export demand in the textile and apparel sector exceeded expectations. Currently, the proportion of funds held in the sector is relatively low, presenting a low-positioned investment window. In textile manufacturing, the stronger the cyclical attribute, the greater the growth potential; favoring upstream price-increasing varieties and focusing on the recovery of the sports manufacturing sector. 2026 is expected to become a turning point for consumer demand in the apparel and home textile industry.

Daiwa Capital Markets released a research report indicating that Li Ning’s revenue in the second half of 2025 was 14.8 billion yuan, up 3.3% year-over-year, exceeding the bank’s and market forecasts by 3.8% and 4.2%, respectively; gross profit margin was in line with the bank’s estimate but 0.3 percentage points higher than market expectations.

Daiwa believes that the outperformance was mainly due to strong franchise and wholesale performance, especially the rebound in sales in Q4 2025. They maintain a “Buy” rating for Li Ning based on its significantly better-than-expected 2025 results.

Credit Suisse issued a report stating that Li Ning’s sales and net profit in the second half of last year increased by 3% and 13% year-over-year, respectively, surpassing expectations by 4% and 28%. Excluding government subsidies, net profit in the second half of 2025 rose 17% year-over-year. The sales increase was mainly driven by an 8% rise in wholesale sales, compared to a market expectation of 3%.

Credit Suisse pointed out that the second half of 2025 was the first semi-annual period since H2 2022 to see year-over-year net profit growth. The company’s 2026 performance guidance is crucial. Regarding gross profit margin expansion, they expect management to avoid overly aggressive strategies. Overall, sales and net profit in 2025 exceeded expectations, so they maintain a “Hold” rating on Li Ning.

Author’s note: These are personal opinions for reference only.