Ask AI · How does Li Ning’s professional transformation win market confidence?

01. Better Than Expected

On March 20th, Li Ning’s stock opened sharply higher. By the close, it was trading at HKD 21.44 per share, up 8.56%, with a market capitalization increase of HKD 4.369 billion to HKD 55.418 billion in one day. Meanwhile, other domestic sportswear companies listed in Hong Kong—Anta, Xtep, and 361 Degrees—saw stock price changes of -0.84%, 3.9%, and 1.71%, respectively.

The surge in Li Ning’s stock was driven by the release of its 2025 financial report the night before. The data revealed three key points: ongoing adjustments, short-term revenue growth without profit increase, but ample cash flow on hand—“having grain in hand, no worries.”

During the reporting period, Li Ning’s revenue was RMB 29.598 billion, up 3.2% year-over-year. Compared to previous years, growth has slowed. From 2022 to 2024, annual revenue growth rates were 14.3%, 7.0%, and 3.9%. However, considering Li Ning is still in a period of adjustment, the market generally views this revenue performance as in line with or slightly exceeding expectations.

By product category, in 2025, revenue from the three main segments—shoes, apparel, and equipment & accessories—was RMB 14.651 billion, RMB 12.327 billion, and RMB 2.621 billion, respectively, with varying degrees of growth. They accounted for 49.5%, 41.65%, and 8.86% of total revenue, roughly consistent with 2024.

In terms of channels, in 2025, revenue from direct stores, wholesale, and e-commerce channels was RMB 6.655 billion, RMB 13.773 billion, and RMB 8.743 billion, respectively, representing 23%, 46%, and 31% of total revenue. Wholesale and e-commerce share increased, while direct store share decreased due to strategic adjustments and shifting consumer scenarios.

Due to channel restructuring, the proportion of direct stores decreased, leading to a slight decline in gross margin. In 2025, gross margin fell by 0.4 percentage points to 49%. The company stated that this was mainly due to two factors: the reduced share of direct stores and intensified promotional competition in direct channels, which prompted larger discounts.

Compared to revenue and gross margin, net profit was more impressive. During the period, net profit attributable to shareholders was RMB 2.936 billion, down 2.6% year-over-year, mainly due to tax rates and non-operating factors. However, if only the second half of 2025 is considered, net profit grew by 13% year-over-year.

Meanwhile, considering Li Ning’s renewed focus on professionalism, with increased investments in marketing (especially related to the Olympics) and R&D, market concerns about profitability persisted. Some investors, after reviewing the financials, noted that management’s mid-year guidance for 2025 profits was around RMB 2.5 billion. The actual net profit margin of 9.9% exceeded expectations, showing better-than-anticipated performance.

During the reporting period, Li Ning’s advertising, marketing, and R&D expenses increased by 16.34% and 3.88%, respectively. However, due to effective cost control elsewhere, overall profitability was not significantly affected. Through channel integration and refined operations, operating profit margin rose by 0.4 percentage points to 13.2%.

02. The Transformation Is Still Underway

In recent years, Li Ning has shifted its strategic focus from “Chinese潮流” (trend fashion) to professional sports. The industry consensus is that trends can only generate short-term bursts; professionalism is the core for enduring cycles.

In 2025, Li Ning invested heavily to regain the title of “Official Partner of the Chinese Olympic Committee” from Anta, demonstrating its commitment to transformation. Through frequent Olympic exposure, Li Ning aims to further solidify its positioning as a “professional sports brand.”

At the same time, Li Ning is strategically building professional barriers in R&D, products, and channels. For example, resources are being directed toward categories like running, basketball, and badminton, with added in-store professional scene experiences, and strengthening its technology platform and professional product matrix.

In 2025, Li Ning’s professional transformation made notable progress. This offers another perspective beyond financial data to review its operational achievements.

According to Li Ning’s data, in 2025, the revenue share from running, basketball, and general training categories reached 64%, with professional products accounting for over 56%. Notably, running and badminton categories created new business opportunities.

Specifically, during the period, revenue from running increased by 10%, and its share of total revenue rose for five consecutive years—from 16% in 2021 to 31% in 2025—making it Li Ning’s largest category. Badminton revenue grew by 30%, and general training increased by 5%, driven mainly by the development of functional fabrics and expanding female sports consumers.

On the flip side, the professional transformation may put short-term profit under pressure. R&D, sponsorships, channel upgrades, and team building all require ongoing significant investments. Whether these investments will translate into barriers and premium capabilities remains to be seen over time.

Additionally, some issues reflected in the financial report—such as insufficient growth momentum, underperformance of direct channels dragging overall results, and increased discounts due to fierce competition—still need to be addressed.

Fortunately, Li Ning’s “reserves” remain substantial. By the end of 2025, net cash increased by RMB 1.81 billion year-over-year to RMB 19.97 billion. “Ample cash reserves provide Li Ning with a solid financial foundation and flexible resource allocation, effectively hedging market volatility and supporting rapid deployment to seize market opportunities,” the company stated.

(Author | Lin Mu, Editor | Wu Yue, Image Source | Visual China, Content from Caijing Tianxia WEEKLY)