Li Ning Company Limited · HKEX:2331
Li Ning — Investor Presentation (December 2012)
23 slides from Li Ning's investor presentation, Dec 17, 2012
Slide 1: Investor Presentation
LI NING COMPANY LIMITED 李寧有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 2331) INVESTOR PRESENTATION 17 December 2012
Slide 2: Disclaimer
This presentation incorporates certain information stated in Li Ning Company Limited (the “Company”)’s announcement (the “Announcement”) dated 17 December, 2012 as published on the websites of the Stock Exchange of Hong Kong Limited and the Company. This presentation should be read in conjunction
Slide 3: Speaker: Mr. Li Ning
Speaker: Mr. LI Ning Founder, Executive Chairman and Executive Director 2
Slide 4: Agenda
Mr. Li Ning, Founder & Executive Chairman – Announcement Overview – Strategy Overview – Update on Marketing Initiatives Mr. Jin-Goon Kim, Executive Vice Chairman & Executive Director – Background – Transformation Plan Update – Channel Revival Plan Q&A 3
Slide 5: Announcement overview: the road to long-term and sustainable growth
Background on recent challenges with the sportswear sector and Li Ning Company Update on progress for key initiatives in Transformation Plan Board approves “Channel Revival Plan” to restore healthy profitability to channels, following successful pilot programs with top distributors Substanti
Slide 6: Long-term Market Drivers
LI-NING - Long heritage and Long-term Market Drivers close association with Chinese sports Urbanization - continues to move 1~2% rural population to urban area annually Purchase - consumers continues to purchase more Foreign Brand 1 30 as disposable spending and sophistication 32 Trade up – ac
Slide 7: China Market Core Brand Sports Essence
China Market Core Brand Sports Essence 6
Slide 8: Leading sportswear brand and closest association with Chinese sports
National Teams Basketball Track & Field / Running Badminton Five gold medal teams, CBA: A key driving force of Leading sponsorships representing over 1/2 of – Main professional China’s running culture including national gold medals that China basketball league through sponsorship of team and
Slide 9: CBA sponsorship impact
In the few months since the opening of the CBA season, attendance was significantly higher than last year OOH/ Print/ Home games were sold out at Digital Media Beijing, Guangdong, Shanxi and Sports Marketing Digital Xinjiang In the first 3 months, CCTV-5 broadcasted four games each CBA Event w
Slide 10: Increased awareness of cooperation between LN and Wade
Warm-up stage Press Conference Promotion of LN Basketball （10.1-10.9） （10.10-11.11） Proposition （11.12-12.31） 10.8 10.10 10.11-10.14 10.22 11.12 Airport Press China Launch of limited TVC and OOH pickup by Conference exhibition edition shoe for China fans game exhibition game The launch of the global
Slide 11: Speaker: Mr. Jin-Goon Kim
Speaker: Mr. Jin-Goon KIM Executive Vice Chairman and Executive Director 10
Slide 12: Wholesale practice and overexpansion leading to channel inventory build-up
Sell in vs. Sell Through Illustration Channel Inventory Illustration Sales to distributors (“sell in”) Balance Channel Inventory Build Up (sell in > sell through) Retail sales of distributors (“sell through”) Excess inventory which needs to be cleared (origin of “Channel Revival Plan” costs) 2010 20
Slide 13: Current challenges within the channels
Sell In > Sell Through Current Challenges Excess Higher mix of old Lower distributor channel products leading to Declining retail and sub-distributor inventory heavy discounting performance profitability and cash flows Current challenges within the channels resulting from the wholesale practice bega
Slide 14: Higher mix of older products leading to retail discounts
ILLUSTRATIVE ACTUAL RESULTS Inventory Mix Store Count % New Products % Old Products 8,255 7,915 Year 1 Year 2 7,303 Retail Price as % of Tag Price 2010 2011 2012 H1 Average Trade Receivable Days Year 1 Year 2 108 Store Profitability 76 52 2010 2011 2012 H1 Year 1 Year 2 Note: The above charts are of
Slide 15: Vision: Solidify LI-NING as the leading brand in Chinese sportswear
Improve store unit Focus on core brand economics sportswear in China Rationalize network Strategic investments in coverage through retail brand (e.g., CBA) profiling Make competitive products Strengthen outlets and with exciting designs and direct stores technologies, in shorter Manageme
Slide 16: Key Initiatives
KEY INITIATIVES #1 Management Team #2 Distribution Channel Management and #3 Execution Branding and Capabilities Marketing #4 Products and Merchandising #5 Retail Business Model #6 Cost Structure 15
Slide 17: Initiatives: management team, distribution channel, branding and marketing
Near Term Medium Term #1 Appointment of Mr. Jin Goon Kim as Organizational restructuring Executive Vice Chairman and optimization Appointment of Chief Marketing Officer, Management Team Chief Product Officer, Chief Designer, interim Chief Sales Officer and Chief Supply Chain Officer Improved
Slide 18: Initiatives: products, retail business model, cost structure
Near Term Medium Term #4 SKU rationalization Consumer-oriented product Improved pricing strategy with broader planning, design and Products and and more targeted coverage of key development Merchandising demographics Build stronger innovation Introduction of “hero” SKUs capabilities #5 R
Slide 19: Strengthening of board and management execution capability
Structure of the Board of Directors 3 non-executive 4 independent non- 3 executive directors directors executive directors Introduce outstanding talents to build a strong management team Chief Supply Chain Interim Chief Sales Chief Product Chief Marketing Chief Designer Officer Officer Officer Offic
Slide 20: Opportunities for improving retail productivity
Illustration of Retail Productivity Improvement Levers Higher Mix of Right Product Stockout Retail Network Retail New Products Assortment Prevention Capabilities Optimization Productivity Improvement Multiple opportunities identified for improving retail productivity 19
Slide 21: Price point coverage, hero SKUs and network optimization
ILLUSTRATION OF PRODUCT ASSORTMENT PILOTS NETWORK OPTIMIZATION Entry Level Sneaker Pilot (Sell Out %) Pilot All Sneakers Size and number of stores Location and density Launch Today Channel policies Hero SKU Pilot (Sell Out %) Pilot All SKUs Order fulfillment model Retail operations Launch Today Note
Slide 22: Channel Revival Plan costs and actions
Estimated costs of RMB 1.4-1.8 billion (mostly non-cash and in the form of accounts receivables offsets) for the various channel initiatives Expected to restore the healthy profitability of channel partners Channel Revival Plan Actions Current Status Target Results Inventory clearance Test p
Slide 23: Q&A
eS > | O&A
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