Aug. 22 (Bloomberg) -- Li Ning Co., the Chinese sportswear retailer founded by the former Olympic gymnast of the same name, reported a 84.9 percent drop in first-half profit as it closed some stores.
Profit for the six months ended June 30 slid to 44.3 million yuan ($6.97 million) from 294 million yuan a year earlier, according to a statement to the Hong Kong stock exchange today. That compares with the 109.3 million yuan average of three three analyst estimates compiled by Bloomberg. Sales fell 9.5 percent to 3.88 billion.
The company “controlled the cost and efficiency of newly opened stores and closed up some inefficient stores,” according to its statement. The number of Li-Ning brand retail stores was cut by 952 to 7,303, it said.
The retailer, which faces escalating competition from Nike Inc., Adidas AG, and Anta Sports Products Ltd., in June projected a “substantial” profit decline this year. To revive earnings the company plans to clear inventory and invest in marketing.
The sportswear company in July announced the departure of Chief Executive Officer Zhang Zhi Yong. Founder Li Ning will help run the company and Kim Jin Goon, a partner at private equity firm TPG Capital, will become executive vice chairman, the company said at that time.
In January, Li Ning agreed to sell 750 million yuan of convertible bonds to TPG Capital and Singapore’s sovereign fund to raise money for more stores and product development.
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