Revenue Growth Without Profit Increase Is Only a Temporary Growing Pain, Can Li-Ning Regain Market Recognition Through Professional Racing Tracks?

AI · Li Ning: How does the professional sports track transformation lay the foundation for high-quality development?

Produced by | Zhongfang.com

Reviewed by | Li Xiaoyan

Against the backdrop of global sports apparel entering stock competition and the overall pressure on the domestic clothing industry, domestic sports giant Li Ning delivered an annual report demonstrating resilience and growth. On March 19, Li Ning announced its 2025 full-year results, with revenue reaching 29.598 billion yuan, a 3.2% increase year-over-year, setting a new record; operating cash flow was 4.852 billion yuan, with a net cash flow of 19.97 billion yuan, maintaining solid financial fundamentals. Despite facing cyclical challenges of rising costs without proportional profit growth, the company’s strategic focus on professional sports, channel optimization, and positive capital market feedback have laid a solid foundation for high-quality development in the new Olympic cycle.

In 2025, the overall performance of China’s textile and apparel industry was sluggish. According to the National Bureau of Statistics, retail sales of clothing products above designated size increased by only 2.8% year-over-year, while revenue and profit of large-scale clothing enterprises declined by 12.67% and 27.34%, respectively. Amid industry downturns, Li Ning achieved positive revenue growth and hit a record high, highlighting the brand’s strong operational resilience. Financial reports show the company’s net profit attributable to parent was 2.936 billion yuan, with a gross profit margin maintained at a high level of 49%, only slightly down by 0.4 percentage points; in the second half of the year, net profit increased by 13% year-over-year, marking the first positive half-year net profit growth since the second half of 2022, signaling clear profit recovery.

After the earnings release, the capital market did not react negatively to the phase of increased revenue without profit growth. On March 20, Li Ning’s Hong Kong stock opened high and rose further during the day, with a peak increase of over 13%, closing up 8.56%, and the market capitalization rose to HKD 55.4 billion, reflecting investor confidence in the company’s strategic layout and long-term value. Several international investment banks also issued positive research reports. Daiwa Capital Markets noted that Li Ning’s 2025 performance significantly exceeded market expectations and rated it a “Buy”; Credit Suisse believed that the company’s sales and net profit in the second half of the year surpassed market forecasts, with a faster-than-expected profit recovery pace.

Li Ning’s phenomenon of increasing revenue without corresponding profit growth is a phased result of industry cycles and strategic adjustments. During 2020-2022, under the wave of national潮 (Guochao), Li Ning rapidly expanded its offline stores, but subsequent market changes led to inventory pressure. Starting in 2024, the company proactively optimized channels by rationally reducing inefficient stores and adjusting the store matrix, while also moderately clearing inventory. Coupled with the return of潮 (Guochao) to rationality, product premium capabilities faced short-term challenges. However, management坚持底线 (stick to the bottom line), clearly stating that they will not pursue scale through excessive discounts, fully ensuring gross margin stability. This prudent strategy has safeguarded profit margins for long-term development.

In response to industry competition shifts, Li Ning is firmly shifting from潮 (Guochao) marketing to a professional sports track, leveraging top-tier event resources to strengthen its professional brand image. In 2025, the company secured a major partnership as an official partner of the Chinese Olympic Committee and became the official strategic partner of the Beijing Half Marathon, continuously increasing resource investment in core categories such as basketball, running, table tennis, and badminton. Management stated that top-tier event sponsorships focus on medium- to long-term brand building rather than short-term sales conversion. Although this may bring temporary financial pressure, it can be absorbed through improved operational efficiency. This strategy has already shown initial results, with professional products becoming the core engine of growth. Categories like running and badminton performed well, and the brand’s professional image continued to deepen.

Channel and product dual-driven strategies provide a solid support for revenue growth. On the channel side, franchise dealers play a core role, with revenue up 6.3% year-over-year and their share rising to 46.6%; e-commerce channels seized new traffic opportunities, with revenue up 5.3%, and core IP products like “Chasing Wind” and “Sharp Blade” maintaining top positions in their segments. By the end of 2025, Li Ning’s retail outlets reached 7,609 stores, a net increase of 24 stores year-over-year, with the outdoor independent store “COUNTERFLOW” successfully launched, enriching store formats. On the product side, footwear revenue reached 14.65 billion yuan, apparel revenue 12.33 billion yuan, both slightly up; equipment and accessories revenue was 2.62 billion yuan, achieving balanced development across categories.

Cash flow and dividend policies further confirm Li Ning’s healthy financial status. In 2025, the company’s net cash flow from operating activities was 4.852 billion yuan, with inventory turnover only 64 days, indicating high asset utilization efficiency and strong financial security. Despite the cyclical decline in net profit, Li Ning maintained a high dividend payout policy, distributing 0.5695 yuan per share, with a payout ratio of 50%, returning value to investors with real cash, demonstrating management’s confidence in the company’s long-term prospects.

Looking ahead to 2026, Li Ning issued an optimistic performance outlook, with management aiming for high single-digit growth in both revenue and net profit margin, potentially reversing the current scenario of increased revenue without profit growth. The new Olympic cycle from 2026 to 2028 will officially begin, with Li Ning continuing as an official partner of the Chinese Olympic Committee, providing equipment support for the national team. The brand exposure from the Milan Winter Olympics has already begun to show effects, with potential for further market share and brand value growth. Meanwhile, the domestic textile and apparel sector is entering a low-positioned layout window, with domestic demand recovering beyond expectations, creating a favorable external environment for Li Ning’s performance recovery.

From潮 (Guochao) to professional deepening, Li Ning has completed a strategic transformation amid industry cycle fluctuations. In 2025, revenue hit a new high, cash flow remained robust, and the professional strategy proved effective, indicating the company has emerged from inventory adjustment pains. In the new industry landscape of stock competition, Li Ning is gradually unleashing long-term growth potential by focusing on professionalism, leveraging events, and strengthening channels. As consumer markets recover and Olympic dividends are released, this domestic sports giant is expected to achieve synchronized profit and scale growth in the new cycle, returning to a high-quality development fast lane.