Chinese sports brand Li Ning returns to profit

HONG KONG - Chinese sportswear maker Li Ning Co Ltd on Thursday said it returned to profit in 2015 after three consecutive years of losses, beating its own guidance of a break-even result on the back of a surge in online sales.

China's best-known home-grown sports brand posted an annual net profit of 14.3 million yuan (S$3 million), compared with a 781.5 million yuan loss a year ago. Revenue rose 17 per cent to 7.09 billion yuan. "Revenue of the e-commerce division increased by 95 per cent year-on-year. This will emerge into growth for the whole year of 2016," the company said in a statement.

Chinese sportswear firms are benefiting from the government's efforts to boost consumer spending and promote healthier living in the lead-up to the 2022 Winter Olympics in Beijing.

Last month, bigger rival ANTA Sports posted a 20 per cent rise in its 2015 net profit due to growth in children's lines and e-commerce businesses.

Smaller rivals 361 Degrees and Xtep saw their 2015 profit jump 30 per cent. Peak Sports rose 22 per cent.

Li Ning, whose investors include private equity firm TPG Capital Management and Singapore sovereign wealth fund GIC, said in January that it expected to break even in 2015 due to an increase in sales revenue and gross profit, a drop in expenses and expansion of its e-commerce business.

It said it would open a net 300 to 500 points of sale in 2016 while maintaining cost control.

Li Ning shares have fallen 12 per cent so far in 2016, lagging a 7.6 per cent slide in the benchmark Index.