Li Ning, a well-known domestic sporting goods company, saw a high double-digit decline in the total orders for orders in the fourth quarter, and orders for apparel and footwear products all fell by double digits compared to the same period of the previous year, with apparel orders falling by more than 20% year-on-year. In view of the result of the trade fair, Li Ning expects that the 2012 results will be dragged down, and sales revenue will increase. The net profit will also drop sharply.

According to Hong Kong Wen Wei Po, Li Ning’s total order booked in the fourth quarter recorded a year-on-year decrease in double digits. Both orders and orders for shoe products recorded low double-digit declines, while average retail prices fell for low single digits; For apparel products, the order amount and order quantity both fell by more than 20% year-on-year, and the average retail price recorded a decrease in the number of low single digits. In the whole year, the order amount for the new product ordering club recorded a high single-digit decline year-on-year.

Li Ning said that in 2012, the competition in the sporting goods industry has become fiercer, and the sales promotion efforts have been further increased, and the pressure on destocking at the retail end has remained severe. Although the company started to reform at the retail end early, it is subject to the influence of the market environment, and the results of reforms will take time to appear.

Li Ning stated that in order to cope with the harsh environment of the industry and avoid creating new inventory pressure on the retail side, it actively communicated with the distributors and controlled the arrangement of orders, resulting in a further reduction in the amount of orders in the fourth quarter of 2012 compared with the same period of last year.

Li Ning’s 2012 performance outlook was mostly pessimistic about net profit or both. Li Ning’s announcement stated that according to the results of the trade fair, the company’s management expects that the Group’s sales revenue in 2012 will likely have negative growth compared to 2011.

In terms of fees, the Group’s brand marketing and promotion expenses will experience a substantial increase from the fourth quarter of 2012 to the third quarter of 2017 due to the amount and duration of the sponsorship of the CBA.

With regard to profits, together with the impact of the intangible assets of Lotto franchise business and the payment of interest on convertible bonds, the company expects the profit before tax and profit attributable to shareholders for the first half of 2012 and 2012 Compared with the same period in 2011, there was a significant decrease.

In 2011, Li Ning's net profit was only 386 million yuan, which was less than half of the 2.8 billion yuan of the net profit of the fifth-largest sports brand and the top five sporting goods suppliers. This pessimistic expectation of this year's performance can not help but worry investors.

Li Ning said in a low-key manner that the sponsorship of China's professional men's basketball media had revealed that the sponsorship fee was as high as 2 billion yuan. Li Ning’s recent announcement put the sponsorship of professional men's basketball league matches and the unsatisfactory results of the fourth quarter trade fair together. It is particularly low-key.

Prior to this, the Liberation Daily reported that the total amount of equipment sponsorship contract between Li Ning and the CBA was as high as 2 billion yuan***. The average annual investment of 400 million yuan has risen many times compared to the previous CBA equipment contract.

Li Ning’s statement in the announcement appears particularly dull: “On June 11, 2012, the Group signed a memorandum of cooperation on becoming a sponsor of China Men’s Basketball Professional League (CBA) equipment. The agreement covers 2012-2013 to 2016- Five seasons of 2017."

Regarding the sponsorship amount of 2 billion yuan, Li Ning is unwilling. However, the amount should not be underestimated, as Li Ning’s announcement acknowledges that, influenced by the amount and duration of CBA contract sponsorship, brand marketing and promotion costs will increase significantly in the next five years.

The data shows that Li Ning’s investment in advertising and marketing expenses in 2010 and 2011 were as high as 1.29 billion yuan and 1.43 billion yuan respectively. In the face of the increasingly severe industrial environment and the pressure to destock, the sponsorship contract seems to make its performance even more profound.