Li Ning Company Limited · HKEX:2331
Li Ning — H1 2021 Earnings Presentation
43 slides from Li Ning's earnings presentation, August 2021
Slide 1: Interim Results
Interim Results (Incorporated in the Cayman Islands with limited liability) (Stock Code:2331)
Slide 2: Disclaimer
2021 Interim Results Aug.2021 Disclaimer This presentation incorporates information contained in the interim results announcement (the “Results Announcement”) for the six months period ended 30 June 2021 of Li Ning Company Limited (the “Company”). This presentation should be read in conjunction with
Slide 3: Contents
Results Highlights CONTENTS Financial Review Strategic Direction Operational Progress Appendix
Slide 4: Results Highlights
Results Highlights Results Highlights / 2021 Interim Report
Slide 5: 2021H1 Financial Highlights
2021 Interim Results Aug.2021 2021H1 Financial Highlights Financial Highlights: • Net profit attributable to equity holders increased by 187% to RMB1,962 million, and the net profit margin raised from 11.1% to 19.2%; Revenue increased by 65% to RMB10,197 million Gross profit margin expanded 6.4
Slide 6: 2021H1 Operational Highlights
2021 Interim Results Aug.2021 2021H1 Operational Highlights Operational Highlights: • The retail sell-through for the overall platform increased by low-nineties, including online and offline channels; • Channel inventory declined mid-single-digit with improved aging structure, notwithstanding the ab
Slide 7: Financial Review
Financial Review Financial Review / 2021 Interim Report
Slide 8: Revenue
Revenue Group Total 2021 Interim Results Aug.2021 Change, YoY GROUP Footwear Apparel Equipment&Accessories 65% 10,197 541 -RMB million- 7,615 8,276 439 6,255 401 6,181 5,062 273 315 4,050 4,424 3,060 2,941 4,594 2,922 3,164 2,925 3,413 H1 H2 H1 H2 H1 2019 2019 2020 2020 2021 COVID-19 recovery and ma
Slide 9: Revenue and Sell-through Mix
Revenue and Sell-through Mix LN Brand, excl. International Markets and LN YOUNG 2021 Interim Results Aug.2021 Sell-Through Mix Company Revenue Mix (Incl. Retail and Wholesale) E-commerce Retail Wholesale New Product (Current and Last Season) Old Product 100% 100% 48% 46% 45% 50% 50% 79% 77% 77% 82%
Slide 10: Same Store Sales Growth (SSSG) Rate
Same Store Sales Growth (SSSG) Rate LN Brand , excl. International Markets and LN YOUNG 2021 Interim Results Aug.2021 Overall Platform Low- High- eighties seventies SSSG (2021 Q2 vs 2020 Q2) Overall Offline Overall Low-eighties Retail Low-nineties Low- Mid- Low- ↓Mid- Wholesale Low-seventies sin
Slide 11: Online and Offline Expansion
Online and Offline Expansion LN Brand, excl. International Market Sales 2021 Interim Results Aug.2021 Sell-through growth, YoY % POS number (Period end) (Excl. LN YOUNG) LN Brand LN Young Offline Channel Online and Offline Channels 7,550 7,294 Low- High- nineties eighties 6,983 6,933 1,101 6,745 872
Slide 12: Wholesale Business
Wholesale Business^ LN Brand, excl. International Market Sales and LN YOUNG 2021 Interim Results Aug.2021 Business Performance Sell-through and Revenue Change, YoY% Revenue No. of POS (Period End) Wholesale Wholesale Sell-through (RMB million) Revenue revenue excl. (Exclude 5,157 Sell-in to Specialt
Slide 13: Retail Business
Retail Business^ LN Brand 2021 Interim Results Aug.2021 Business Performance Revenue Change Analysis Revenue(RMB million) No. of POS (Period End) 1,379 1,292 +282 -130 1,239 1,149 +35 2,473 1,088 +965 YoY 87% 1,321 2,473 H1 Same New Closed Transferred H1 1,837 1,905 2020 Store Stores Stores store 20
Slide 14: GP Margin Analysis
GP Margin Analysis Net Change in Major Items 2021 Interim Results Aug.2021 2020 H1 Direct Retail Inventory Channel 2021 H1 E-commerce Reported Gross Provision & Revenue Others Reported Gross Margin GP Margin Margin R&D cost Mix GP Margin +0.5p.p. +0.4p.p. 55.9% +1.5p.p. +1.5p.p. +2.5p.p. 49.5% Gross
Slide 15: Profitability Analysis
Profitability Analysis Net Change of Major P&L Items 2021 Interim Results Aug.2021 （RMB Million） 2020H1 Sales Related Other 2021H1 Gross Platform Operation # Reported income & Tax Reported Profit Variable Costs Costs Net Profit Interest Net Profit Retail & EC Logistics Advertising Other Business & N
Slide 16: Channel Inventory
Channel Inventory Incl. Online and Offline 2021 Interim Results Aug.2021 Inventory Level* (Tag Price) Turnover Months(Store + Warehouse Inventory) 6 months or less 7 - 12 months Over 12 Months Turnover Months(Store Inventory Only) (New Products) 100% 12% 9% 12% 9% 7% 10% 14% 15% 13% 17% 3.7 3.7 3.7
Slide 17: Company Inventory
2021 Interim Results Aug.2021 Company Inventory 6 months or less 7 - 12 months over 12 months At cost, before provision (RMB Million) （New Products） YoY 100% 14% 13% 10% 15% 15% 17% 13% 14% 14% 15% 1,681 16% 1,540 1,477 1,459 1,393 77% 72% 71% 69% 72% Jun Dec Jun Dec Jun Jun Dec Jun Dec Jun 2019 201
Slide 18: Trade Receivables
2021 Interim Results Aug.2021 Trade Receivables At gross amount, before provision (RMB Million) Below 90 days 91 - 180 days over 180 days YoY 2% 100% 23% 22% 24% 21% 1,073 1,089 27% 1,040 4% 5% 4% 4% 945 939 12% 73% 73% 72% 75% 61% Jun Dec Jun Dec Jun Jun Dec Jun Dec Jun 2019 2019 2020 2020 2021 201
Slide 19: Working Capital Efficiency
2021 Interim Results Aug.2021 Working Capital Efficiency -RMB Million- Payables Trade Receivables^ Inventory^ Working Capital~ 4000 Working Capital~ as % of Revenue* 3000 2000 1,375 1,290 1,274 1,154 1,138 1000 11% 9% 10% 8% 6% 0 -1000 -2000 H1 H2 H1 H2 H1 2019 2019 2020 2020 2021 Healthy working ca
Slide 20: Balance Sheet Summary and Cash Position
Balance Sheet Summary and Cash Position 2021 Interim Results Aug.2021 8,313 （RMB Million） 7,443 5,963 5,762 4,725 Net Cash Position^ Jun Dec Jun Dec Jun 2019 2019 2020 2020 2021 Cash Conversion Cycle (Days) 32 26 30 20 13 # # Operating Cash Flow 1,366 3,503 479 2,763 3,325 ^ Net Cash = Cash and Cash
Slide 21: Strategic Direction
Strategic Direction Strategic Direction / 2021 Interim Report
Slide 22: Continuously Enhance LI-NING's Experience Value to Grasp Industry and Market Opportunities
Continuously Enhance LI-NING’s Experience Value to Grasp Industry and Market Opportunities 2021 Interim Results Aug.2021 Steadily Rising Consumer Purchasing Power to Boost the Sports Consumption Demands China’s economy sustained a steady recovery in the first half of 2021. Household disposable incom
Slide 23: Deepen the Strategy of Single Brand, Multi-categories, Diversified Channels
Deepen the Strategy of “Single Brand, Multi-categories, Diversified Channels” 2021 Interim Results Aug.2021 Online Store Multi- categories Diversified Channels Sports & Fashion 23
Slide 24: Core Categories Drive the Sustainable Brand Development
Core Categories Drive the Sustainable Brand Development Aug.2021 2021 Interim Results Retail Sell-through – YoY Change（2021H1） Retail Sell-through — Mix Total Value 92% Running 87% 1% Training 69% Basketball 80% 19% Sports Non-core 39% 116% 42% 15% Casual 23% Sell-in – YoY Change（2021H1） Running Tra
Slide 25: Basketball Series
Ignite Street Fashion Aug.2021 ① Street Basketball Strong Kick-off, Series — BADFIVE Supported by Technology ① Professional Basketball— 2021 Interim Results Yushuai XIV WADE series — All City 9 08.2021 - template Basketball — Leading with Collaboration with Players Professionalism, Professional Gain
Slide 26: Running: Focus on Technology, Empower Challenger
Racing Series Running — Feidian 2,099 Feidian 799 Focus on Aug.2021 2.0 Elite RMB Discovery RMB Technology, Feidian 1,299 Rouge 399 Empower Challenger RMB Rabbit IV RMB Strong Kick-off 2021 Interim Results High Resilience Series Protection Series • Focus on the breakthroughs and iterations of the te
Slide 27: Training: Upgrade Fabric Technology, Strengthen Female Business
Upgrade Fabric Technology, Strengthen Female 2021 Interim Results Aug.2021 Create Best Gym Business, Experience Develop Diversified Training Scenarios 27
Slide 28: Sports Casual: Young and Fun with Incessant Creativity
Sports Casual Aug.2021 — Young and Fun with Incessant 2021 Interim Results Creativity Cherry Blossom Series — Attract Young Girls’ Hearts 08.2021 - template Traditional Festival — Collaboration with Artists — Skateboarding Series Titan HALO ‘Dragon Boat’ Join hands with Popular — Gather Fashion Infl
Slide 29: Athlete and Event Sponsorships
Results Aug.2021 Aug.2021 NBA star — Jimmy Butler template Interim Results - 08.2021 NBA star— CBA Championship C.J. McCollum 2021Interim Bahrain athlete — 2021 Qingdao Marathon Marius Kimutai China中國乒乓球國家隊 National Table Tennis Team 2021 Olympic Champion Olympic Champion Japanese Player Indonesian
Slide 30: Brand Marketing — Crossover Cooperation, Leading with an Avant-Garde Attitude
LI-NING x Steven Harrington Sharp psychedelic-pop aesthetic become a Summer hit LI-NING x Disney Collection LI-NING x Line Friends Mickey x Keith Haring Shine in Summer together with Interesting pop art, 08.2021 - template “Best Friends” redefine cuteness with a rebellious style Brand Marketing — Cr
Slide 31: Brand Marketing — LI-NING Fall / Winter 2021 Collection
2021 Interim Results Aug.2021 Brand Marketing — LI-NING Fall / Winter 2021 Collection • The Fall/Winter 2021 Fashion Show was held on 7 April 2021 in Zhengzhou, Henan. We combined the catwalk, live performance, and party to show the endless possibilities of sports fashion at the hinterland of centra
Slide 32: Operational Progress
Operational Progress Operational Progress / 2021 Interim Report
Slide 33: Core Business Development Strategy
2021 Interim Results Aug.2021 Core Business Development Strategy Store Operation Efficiency Effective Inventory Management Enhance Omni-channel Consumer Focus Business Core Competitiveness Fitness & Efficiency-driven Corporate Culture Channel Products and Efficiency Point of Sale Merchandising Disci
Slide 34: Focus on Improving Operation Efficiency to Drive Revenue and Profit Margin Growth
Center on Business Development Strategy, Focus on Improving Operation Efficiency to 2021 Interim Results Aug.2021 Drive the Growth in Both Revenue and Profit Margin Product Merchandising Kidswear Channel Operation Business Efficiency Both Development Supply E-commerce Revenue and Strategy Chain Prof
Slide 35: Product Merchandising: Strengthen Product Management, Unleash Product Efficiency
Product Merchandising: Strengthen Product Management, Unleash Product Efficiency 2021 Interim Results Aug.2021 Product Operation Product Inventory Product Structure Product Sales Inventory cost Inventory Structure Proportion of Product New product New product Company Greatly inventory over Product o
Slide 36: Channel: Expand High-Quality Profitable Stores, Enhance Channel Efficiency
Channel: Expand High-Quality Profitable Stores, Enhance Channel Efficiency 2021 Interim Results Aug.2021 Open High-Quality Stores，Accelerate the Channel Upgrade Store Big Store Sell-through Penetration Penetration Structure Total selling square Sell-through contribution of footage increased by Numbe
Slide 37: E-commerce: Continuously Drive Li Ning Omni-Channel Business Model
E-commerce: Continuously Drive the Development of Li Ning Omni-Channel Business Model 2021 Interim Results Aug.2021 E-commerce Business Retail Retail Channel Member Sell-through Development Omni-channel Indicators Structure Online traffic Number of low- conversion rate Number of efficiency online in
Slide 38: Retail Operation: Focus on KPIs
Retail Operation: Focus on KPIs, Drive the Enhancement of Retail Operation Capability 2021 Interim Results Aug.2021 Retail KPIs* Retail Discount Unit Per Conversion Rate Rate Transaction Overall retail Overall discount rate Overall unit per conversion rate increased by transaction increased by high-
Slide 39: Supply Chain: Continuously Optimize Supply Chain Organization
Supply Chain: Continuously Optimize Supply Chain Organization 2021 Interim Results Aug.2021 Supply Chain Efficiency Production Capacity Number of Suppliers Top 3 Suppliers Overall increased Overall decreased 37 Accounted for over 40% by high-twenties Footwear Apparel Footwear Apparel Footwear Appare
Slide 40: Kidswear Business: Define Clear Positioning, Drive Business Growth
Kidswear Business: Define Clear Positioning, Drive Business Growth 2021 Interim Results Aug.2021 Retail Product Channel 01 Efficiency 02 Efficiency 03 Efficiency Retail sell-through increased by 100% New product retail discount Number of stores totaled rate improved by 1,041 Average selling price hi
Slide 41: Appendix
Appendix Appendix / 2021 Interim Report
Slide 42: Appendix — Summary of Income Statement and Balance Sheet
Appendix 1 — Summary of Income Statement and Balance Sheet 2021 Interim Results Aug.2021 2021 2020 Better/ 30 Jun 31 Dec Better/ (RMB million) (RMB million) Period ended (Worse) 2021 2020 (Worse) 30 June Revenue 10,197 6,181 65.0% Cash and Cash 6,108 7,187 (15.0%) Equivalents Gross Profit 5,699 3,05
Slide 43: Appendix — Profit Margins and Key Operating Indicators
Appendix 2 — Profit Margins and Key Operating Indicators 2021 Interim Results Aug.2021 2021 2020 2021年 2020年 Better/ Better/ Period ended (Worse) Period ended 30 (Worse) 30 June June Inventory Turnover Gross Profit Margin 55.9% 49.5% 6.4p.p. 53 84 31 (Days) Trade Receivables Operating Profit Margin