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Li Ning Slumps Most in Two Months After Executives Resign

May 24 (Bloomberg) -- Li Ning Co., China’s largest sportswear maker, fell the most in more than two months in Hong Kong trading after the company said three senior executives resigned, adding to concern sales growth may slow.

The stock dropped 8.4 percent to HK$13.90 at the 4 p.m. close of trading in Hong Kong, the biggest slump since March 17. That extends a 44 percent decline in the past year, the second-worst performance on the MSCI China Index. The benchmark Hang Seng Index was little changed.

Chief Operating Officer Guo Jian Xin, Chief Marketing Officer Fang Shih Wei and Lin Li, head of the e-commerce department, have left the company, Zhang Xiaoyan, a company spokesman, said by phone today. Zhang declined to provide reasons or exact dates for the departures.

“The fact that more than one senior executive is leaving the company causes concern about its operations,” Katharine Song, a Shanghai-based analyst at Sinopac Securities Asia Ltd., said in a phone interview. She rates the stock “neutral.”

Today’s share-price decline was the steepest since March 17, when the sportswear maker tumbled 10 percent after saying order growth in the second half won’t surpass that of the first six months and rising costs will hurt margins.

Li Ning, based in Beijing and founded by the former Olympic gymnast of the same name, said March 16 income growth in the country “has not quite translated into a sustainable increase in purchasing power for sporting goods.” The company changed its logo and slogan last year as part of a brand “revitalization.”

Profit rose 17 percent to 1.1 billion yuan ($169 million) last year, according to a stock exchange filing. Sales increased 13 percent to 9.5 billion yuan.

“Their store expansion may slow, which will result in low order growth,” Hayman Chiu, a Hong Kong-based analyst at Cinda International Holdings Ltd., said in a phone interview. Chiu rates the stock “neutral.”

Li Ning said in an e-mailed press statement that the company’s operations won’t be affected by the departure of individual employees. The three managers left over a period of two months, the company said.

To contact Bloomberg News staff for this story: Michael Wei in Beijing at mwei13@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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