Revenue increases to nearly 30 billion, Li Ning focuses on emerging tracks such as outdoor and tennis, aiming to be number one in the running category.

Ask AI · Why did Li Ning’s net profit fall instead of rising despite revenue growth?

By Guo Yifei

Editor | Yang Buding

On March 19, Li Ning Company’s (02331.HK) 2025 financial report showed that revenue reached RMB 29.598 billion, up 3.2% from the same period last year. The parent-company attributable net profit fell by 2.6 percentage points year over year to RMB 2.936 billion.

The financial report shows that the company’s gross profit was RMB 14.489 billion, up 2.4% over the same period. The overall gross margin was 49.0%, down 0.4 percentage points year over year. In this regard, the financial report explained that this was driven by channel structure adjustments, a decline in the proportion of direct-operated channel revenue, and intensified direct retail promotional competition, which led the brand to increase its discounting efforts. The distributor channel remains the core pillar, with its revenue share increasing by 6.3 percentage points year over year to 46.6%.

Under the “single-brand, multi-category, multi-channel” strategic layout, Li Ning has six core categories: running, basketball, comprehensive training, badminton, table tennis, and sports casual. In addition, amid inventory competition in the sporting goods industry, it is also actively expanding emerging niche sports categories such as outdoor activities, tennis, and pickleball.

Currently, with running as Li Ning’s largest category, its share of retail sales volumes has risen from 16% five years ago to 31% in 2025. Last year, the total number of professional running shoes sold reached 26 million pairs. It hopes to continue maintaining a relative advantage and build “Li Ning Running” into the leading running category among sports brands.

At the same time, emerging categories such as outdoor activities and tennis are showing a breakout trend. By contrast, basketball and sports casual categories saw declines of 19% and 9%, respectively, in 2025.

In response, at a media communication meeting, Qian Wei, Executive Director and Co-CEO of the Li Ning Group, judged that, while keeping the company healthy and stable as a major premise, it should firmly expand business opportunities where it can. For areas with risks, it should stabilize when needed. He said that the decline in the basketball category was affected by the overall sluggish market, and it was also due to the company’s proactive adjustments. Over the past two to three years, the company has actively controlled ordering and does not want to lower the core competitiveness of products for the sake of scale. For professional sports brands, trends are difficult to be sustainable. The sports casual scenarios still need improvement, and there are still market opportunities in the future.

From professional high-end to breaking out of the niche and moving down to broader segments, the outdoor sports track has become the industry’s new hot spot right now. Among Li Ning’s various emerging categories, outdoor activities have performed particularly well: it took two years for retail sales volumes to take off, and in 2025 it achieved a year-over-year doubling. At the end of last year, it opened its first standalone outdoor category store in Beijing.

In this regard, Qian Wei believes that Li Ning’s outdoor products have already gained consumer recognition, but the product breadth is relatively limited—for example, there are not enough products in the pants category and base-layer/inner-wear category. Some product-level consumption demand can be met, but overall consumption demand has not yet been fully satisfied. These emerging categories may not become that large in scale, but their future business space should not be underestimated. There is also tremendous room to expand among female and adolescent consumer groups.

He gave the badminton category as an example. He said that badminton’s proportion in clothing had reached 60%–70% from three to four years ago, but now rackets, racket strings, and shoes account for 85%. Last year alone, it sold 5.5 million badminton rackets, reaching about 7% of the overall revenue share within professional categories. This has made a huge contribution to the group’s overall performance.

In May 2025, after nearly 20 years, Li Ning became the 2025–2028 sportswear cooperation partner of the Chinese Olympic Committee. The rights cover more than ten international events, including the Los Angeles 2028 Olympic Games, the Milan–Cortina d’Ampezzo 2026 Winter Olympic Games, the Aichi–Nagoya 2026 Asian Games, and others.

In response, Qian Wei said that the company hopes to build, in the medium and long term, among broad consumers and sports enthusiasts, brand “mindshare” that positions Li Ning as a professional sports goods brand by investing through partnerships with top-tier sports resources. “This is the core goal of our cooperation with top-tier sports resources, not a marketing strategy for instant or immediate business conversion. Although it brings some pressure to the current financial statements—for example, last year marketing expenses increased slightly—improvements in operating efficiency have done their best to offset the increase in related expenses. This is brand empowerment over the long term, and it is something that is worth doing—or, more accurately, something that must be done.”

By the end of 2025, the number of sales points for the Li Ning brand (including the Li Ning core brand and Li Ning YOUNG) was 7,609 stores, up net by 24 stores from the same period last year. In terms of cash flow management, the net cash generated from operating activities during the year was RMB 4.852 billion. Cash on hand remained ample. At year-end, the scale was RMB 16.717 billion, up RMB 9.218 billion from the same period last year.