Li Ning Company Limited · HKEX:2331
Li Ning — FY2023 Earnings Presentation
41 slides from Li Ning's earnings presentation, March 2024
Slide 1: Li Ning 2023 Annual Results
（INCORPORATED IN THE CAYMAN ISLANDS WITH LIMITED LIABILITY） STOCK CODES：2331（HKD counter）and 82331（RMB counter）
Slide 2: Disclaimer
DISCLAIMER LI NING 2023 ANNUAL RESULTS This presentation incorporates information contained in the annual results announcement (the “Results Announcement”) for the year ended 31 December 2023 of Li Ning Company Limited (the “Company”). This presentation should be read in conjunction with the Results
Slide 3: Contents
LI NING COMPANY LIMITED 1 RESULTS HIGHLIGHTS 2 FINANCIAL REVIEW 3 STRATEGIC DIRECTION 4 CONTENTS OPERATIONAL PROGRESS 5 A P PEN DI X
Slide 4: Results Highlights
RESULTS HIGHLIGHTS ONE TWO THREE FOUR FIVE
Slide 5: 2023 Financial Highlights: Proactive Strategy, Steady Progress
2023 Financial Highlights: Proactive Strategy, Steady Progress Financial Highlights (in RMB) Operational Highlights Revenue Gross margin Net Profit1 Retail sell-through4 27,598million 48.4% 3,187million low-teens Net profit margin： 7.0% remained stable 11.5% Net profit excluding one-off gains not re
Slide 6: Financial Review
FINANCIAL REVIEW ONE TWO THREE FOUR FIVE
Slide 7: Revenue: Footwear category remained dominant
Revenue：Footwear category remained dominant Change, YoY GROUP +7% (RMB million) 27,598 25,803 1,799 22,572 1,616 1,242 10,708 12,410 13,870 14,457 11,824 754 675 7,110 7,365 13,479 13,389 9,506 6,085 6,338 2019 2020 2021 2022 2023 Footwear Apparel Equipment&Accessories Revenue: Group Total 7
Slide 8: Revenue and sell-through mix
Revenue and sell-through mix：A balanced mix of channel revenue and sell-through reduced financial risk Channel Revenue Mix Sell-through Mix（Incl. Retail and Wholesale） 100% 100% 49% 48% 47% 48% 45% 78% 79% 86% 89% 87% 23% 23% 21% 26% 27% 29% 30% 31% 29% 24% 22% 21% 14% 11% 13% 2019 2020 2021 2022 20
Slide 9: Same-store sales growth (SSSG)
Same-store sales growth (SSSG) ：Weak consumption recovery put pressure on same-store performance Overall SSSG (2023 vs 2022) Overall Offline Mid- Overall Low-single-digit Low- Low- Low- teens teens single single- -digit digit Retail Low-teens 0% 2023 2023 2023 2023 Wholesale Low-single-digit Q1 ↓Hig
Slide 10: Online and offline expansion
Online and offline expansion：Expanded key business zones and optimized store layouts POS Number（Year end） Sell-through growth, YoY%（Excl. LN YOUNG） 7,603 7,668 7,550 7,137 1,101 6,933 1,308 1,428 1,202 1,021 Mid- 6,449 teens Low- 6,295 6,240 Mid- teens 5,912 5,935 Low- single- single- digit digit 20
Slide 11: Wholesale business
Wholesale business：Empowered distributors, enhanced retail operational capabilities, led recovery of sales Business Performance Sell-through and Revenue Change, YoY% （RMB million） 5,157 4,770 4,865 4,742 4,763 YOY +1% Low-teens 11,711 11,818 10,222 6,498 6,576 Low-single-digit Low-single-digit 2019
Slide 12: Retail business
Retail business：Retail growth momentum driven by new store opening and same store sales Business Performance Revenue Change Analysis （RMB million） 1,292 1,430 1,498 1,149 1,165 +1,091 -316 +113 6,693 YoY +29% +614 5,191 6,693 5,191 4,915 3,580 3,226 2019 2020 2021 2022 2023 2022 Same New Closed Tran
Slide 13: GP margin analysis
GP margin analysis：Enhanced retail discounting and channel-mix optimization ensured gross margin stability 2022 Direct Retail E-commerce 2023 Channel Reported Gross Gross Others Reported Mix GP Margin Margin Margin GP Margin 48.4% +0.2p.p. -0.8p.p. +0.2p.p. 48.4% +0.4p.p. Gross profit margin: Net ch
Slide 14: Profitability analysis
Profitability analysis：Strategic investment for enhancing long-term returns （RMB million） 2022 Other 2023 Gross Sales Related Platform Operation Reported income# Tax Reported Profit Variable Costs Costs Net Profit & interests Net Profit Retail & EC Logistics Advertising Other Business & New & Expens
Slide 15: Channel inventory
Channel inventory：Inventory turnover reached the most efficient level in five years 4.2 4.2 2% 3% 4% 4.2 3.9 100% 3.6 9% 9% 6% 9% 9% 15% 13% 3.7 3.6 3.1 3.4 3.2 92% 88% 87% 76% 78% Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 Inventory level* (Tag price)
Slide 16: Company inventory
Company inventory：Maintained healthy and manageable inventory levels and ageing structure At cost, before provision YoY +3% 6% 5% 6% 100% 15% 13% 12% 15% 14% 2,628 15% （RMB Million） 2,549 14% 1,866 82% 80% 80% 1,540 71% 72% 1,459 Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 Dec Dec Dec Dec Dec 6 mon
Slide 17: Trade receivables
Trade receivables：At reasonably healthy level At gross amount, before provision 1% 100% 15% 10% 13% YoY +6% 23% 24% 2% 6% （RMB Million） 4% 4% 1,244 1,173 1,111 83% 84% 86% 73% 72% 945 939 Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 90 days or less 91-180
Slide 18: Working capital efficiency
Working capital efficiency: Robust efficiency fuels recovery momentum 4000 （RMB Million） 3000 2,109 1,758 2000 1,290 1,154 1,275 8% 1000 7% 9% 8% 6% 0 -1000 -2000 2019 2020 2021 2022 2023 Payables^ Trade Receivables^ Inventory^ Working Capital~ Working Capital~ as % of Revenue* ~Simple average of op
Slide 19: Balance sheet summary: Healthy operating cash flow
Balance sheet summary: Healthy operating cash flow 18,482 19,050 17,976 Net Cash Position^ （RMB Million） 7,443 5,963 Dec Dec Dec Dec Dec 2019 2020 2021 2022 2023 Cash Conversion Cycle（Days） 26 20 20 30 35 Net Operating Cash Inflow 3,503 2,763 6,525 3,914 4,688 Dividends* 380 510 1,203 1,219 1,434 ^N
Slide 20: Strategic Direction
ONE TWO THREE FOUR FIVE STRATEGIC DIRECTION
Slide 21: Enhancing LI-NING's experience value
Enhancing LI-NING’s experience value, bolster competitive advantages to seize business opportunities Unwavering commitment to R&D investment enhances product quality, integrates functionality with style Product Experience Li-Ning’s Experience Value National policies promote Shopping Sports establish
Slide 22: Single Brand, Multi-categories, Diversified Channels strategy
Ongoing commitment to “Single Brand, Multi-categories, Diversified Channels” strategy Diversified channels 在線商城 Multi- categories Sports & Fashion Basketball Fitness Sports casual Running Badminton 22
Slide 23: Enhancing technology for professional sports products
Enhancing technology for comprehensive range of professional sports products Retail sell-through - Mix 1% Retail sell-through - YoY Change (2023） 35% Total Value 12% Running 40% 23% Fitness 25% Basketball flat Sports Casual flat 27% 14% Running Fitness Basketball Sports casual Others （Including Chin
Slide 24: Running: Continuously refining professional product matrix
Created well-established professional Tapped into professional cross-country multi-scenarios matrix to develop professional running products for Running: Continuously refining our professional product product matrix running sector ⚫ Total sales volume of “Super Light” (超輕), ⚫ Newly created IP “Rouge
Slide 25: Basketball: Building new technological platform
Basketball: Building new technological platform, promoted development of youth basketball in China During the 2022-23 season, the Li-Ning The Yushuai ULTRA is equipped with a Carbon China Primary School Basketball League Core Drive System, featuring “LI-NING BOOM” and Training Camp hosted 1,694 game
Slide 26: Fitness: Focusing on functional technology
Fitness: Focusing on functional technology, diversifying into array of scenarios Men’s Fitness Women’s Fitness ⚫ Continued to upgrade“AIRSHELL Air Movement Technology” (AIRSHELL 氣 ⚫ Conducted research into women's sports preferences, identifying key exercise 動科技) and “DYNAMIC SHELL Protective Techno
Slide 27: Sports casual: Fusing fashion with sportiness
Sports casual: Fusing fashion with sportiness to enhance competitive advantage “SOFT” series “Rich Everyday” Disney Crossovers The Disney Pixar Monsters University series Targeted daily walking and commuting. The Preserved treasured Lunar New Year infused a college-style with adorable and entire ser
Slide 28: Brand marketing
Brand marketing: Integrating product and marketing resources to engage with consumers Wade China Tour Badminton CBA League Marathon Table Tennis 28
Slide 29: Operational Progress
ONE TWO THREE FOUR FIVE OPERATIONAL PROGRESS
Slide 30: Stable and healthy business operations in 2023
Stable and healthy business operations in 2023 E-commerce Product Merchandising Channel Business Revenue grew by Development Business 7% year-on-year to Performance 27,598 million in Strategy Kidswear Retail 2023 Operation Supply Chain 30
Slide 31: Product merchandising
Product merchandising: Strengthening merchandise management capabilities to enhance efficiency of product operation Product Operation Product Products Professional Shoes Structure Sales Million-IP Professional New product 3- New product Product width Product depth shoes million-IP month discount 6-m
Slide 32: Product inventory
Product inventory: Inventory amount and ageing structure in a healthy level, with an efficient inventory turnover Product Inventory Channel inventory Inventory cost Ageing structure to sales ratio Company Ageing Overall channel Inventory cost amount structure of old and inventory-to-sales increased
Slide 33: Retail operation
Retail operation：Stable offline business operations with an increase in sell-through on a year on year basis Retail KPIs* Offline retail Unit per Average Selling sell-through Discounting transaction price Overall offline retail sell- Overall retail Overall unit per Average through discount rate tran
Slide 34: Channel: Focusing on expansion and optimization
Channel：Focusing on expansion and optimization; channel layout in high-tier market is nearly finished Big store* penetration Sell-through structure Store performance 9th generation store image Total selling square Sell-through contribution of footage increased by Number of big stores Number of 9th-g
Slide 35: E-commerce: Navigating challenges
E-commerce: Navigating challenges with focus on sustainable growth in the long run E-commerce Business Retail sell-through Retail discount Inventory turnover Conversion rate Average Online retail sell- discount rate Inventory turnover Conversion rate through deepened by days improved improved slight
Slide 36: Kidswear business
Kidswear business：Achieved overall business growth 01 Retail Efficiency 02 Channel Efficiency ⚫ Retail sell-through increased by mid-thirties ⚫ Number of stores totalled 1,428 ⚫ Average selling price increased by mid-single-digit Average monthly store productivity Unit per transaction increased by l
Slide 37: Supply chain
Supply chain：Continue to drive innovation and transformation on the premise of consolidating fundamental capabilities Strengthening S-class Transformation fundamental capabilities supplier and innovation Focus on quality, Increase the Introduce Innovate Digital delivery lead time, proportion of spec
Slide 38: Development strategy
Development strategy: consolidating and expanding product categories, deepening market penetration Vision To be the most prominent, stylish, world-leading sports brand from China Become the preferred sports brand of Chinese consumers. Fairness in Competition and Corporate Perfect Harmony between Emp
Slide 39: Appendix
APPENDIX ONE TWO THREE FOUR FIVE
Slide 40: Summary of Income Statement and Balance Sheet
Appendix 1 — Summary of Income Statement and Balance Sheet 2023 2022 Better/ 2023 2022 Better/ (RMB million) (RMB million) Year ended 31 December (Worse) As at 31 December (Worse) Revenue 27,598 25,803 7.0% Cash and Cash 5,444 7,382 (26.3%) Equivalents Gross Profit 13,352 12,485 6.9% Selling and dis
Slide 41: Profit Margins and Key Operating Indicators
Appendix 2 — Profit Margins and Key Operating Indicators 2023 2022 Better/ 2023 2022 Better/ Year ended 31 December （Worse） Year ended 31 December （Worse） Gross Profit Margin 48.4% 48.4% — Inventory Turnover (Days) 63 58 (5) Operating Profit Margin 12.9% 18.9% (6.0p.p) Trade Receivables Turnover 15