Source of this article: time Finance author: Zhou Jiabao

Accompanied by domestic sports brand Li Ning Co. Ltd. for nearly a decade, Zeng Huafeng officially announced his retirement.

The other day$Li Ning Co. Ltd. (02331.HK) $The company announced that its chief financial officer, Zeng Huafeng, had reached retirement age and officially resigned from July 8. According to the announcement, after Zeng Huafeng retires, Li Ning Co. Ltd. 's CFO position will be vacant until the company finds a suitable candidate to fill it.

This is also a rare personnel change for Li Ning Co. Ltd. in recent years since Li Ning Co. Ltd. introduced Chinese Japanese Qian Wei (Japanese name: Takeshi Takasaka) as chief executive in 2019.

Zeng Huafeng, 60, who has devoted half his life to the retail industry, joined Li Ning Co. Ltd. in April 2013, responsible for finance and treasury functions, as well as investor relations. Prior to this, Zeng Huafeng has worked at Guess Inc, Ashworth Inc and Levi Strauss Company, and served as Chief Financial Officer, Chief operating Officer, President of Asia and other management positions.

Li Ning Co. Ltd. 's share price closed at HK $71.90, down 2.31 per cent from the previous day, when the CFO position was about to become vacant. Since the beginning of this year, Li Ning Co. Ltd. 's share price has fallen 15%, with a total market capitalization of about HK $188 billion.

In fact, after more than 30 years of establishment, Li Ning Co. Ltd. 's team of professional managers is not very stable. Looking back on Zeng Huafeng's nearly 10 years in Li Ning Co. Ltd., Li Ning Co. Ltd. emerged from the predicament of sustained loss in performance, experienced the performance pressure of Jin Zhenjun as CEO and left the scene sadly, to Li Ning Co. Ltd. 's personal comeback as president of the company, and to Qian Wei airborne to the post of CEO.

In the decade from 2012 to now, the former national number one sports brand has also gone from Nike Inc chaser to Anta from Jinjiang, Fujian Province. Today, although Li Ning Co. Ltd. brands and products are still valuable and influential, Li Ning Co. Ltd. has long lost his first position in terms of performance, capital market performance, or word-of-mouth among dealers.

With the ups and downs of the company's performance, the team of professional managers has experienced reincarnation, which has become a window for the outside world to observe an enterprise.

The Rescue of Li Ning Co. Ltd. Company in the transition period

In 2008, Li Ning Co. Ltd. himself lit the main torch of the opening ceremony of the Beijing Olympic Games, pushing Li Ning Co. Ltd. 's brand image to its peak, while the sports trend swept China. Li Ning Co. Ltd. 's operating income also doubled in three years from 4.349 billion yuan in 2007 to 9.479 billion yuan in 2010, while its net profit increased from 474 million yuan to 1.108 billion yuan.

However, Li Ning Co. Ltd. is facing "false prosperity" at the moment. Some people in the industry pointed out that since its listing in 2004, Li Ning Co. Ltd. Company has pursued too much scale growth. Under the wholesale mode, the management has ignored the blind expansion of the inventory pressure of the terminal and pressed the goods to the dealers, which has also created the fact that "the peak is the inflection point".

When Zeng Huafeng joined Li Ning Co. Ltd., the company was in a period of trough and transformation, and Li Ning Co. Ltd. at that time was facing the embarrassing situation of losing money for years.

Li Ning Co. Ltd. 's performance began to decline in 2011. During the reporting period, sales revenue fell to 8.928 billion yuan from 9.478 billion yuan in the previous year, profits also dropped 65% to 380 million yuan, and 1821 stores were closed during the year. It is widely rumored that Li Ning Co. Ltd. 's poor performance has something to do with the reform measures of Zhang Zhiyong, then CEO. From 2008 to 2010, Zhang Zhiyong shifted Li Ning Co. Ltd. 's strategic focus from sports to fashion, and Li Ning Co. Ltd. 's original classic LOGO and slogan were completely subverted.

In 2012, Zhang Zhiyong, who served as Li Ning Co. Ltd. 's CEO for more than 10 years, tendered his resignation. Subsequently, Li Ning Co. Ltd. introduced foreign private equity group TPG, whose partner Jin Zhenjun served as the company's CEO, and launched a revival plan that cost 1.4 billion yuan to 1.8 billion yuan. That is, within 6-12 months, focus on solving short-term problems such as inventory, cost, organizational execution capabilities, channels, focusing on core business and improving marketing efficiency; improve supply chain management, marketing and product planning models within 1-2 years; transform business models in 2-4 years to improve retail efficiency and return on investment.

Despite going in the right direction, Jin Zhenjun did not improve Li Ning Co. Ltd. 's condition. From 2012 to 2014, Li Ning Co. Ltd. 's revenue increased from 6.676 billion yuan to 6.728 billion yuan, but he lost 1.979 billion yuan, 392 million yuan and 781 million yuan respectively for three consecutive years, totaling nearly 3 billion yuan.

At that time, Li Ning Co. Ltd. 's executive team was in the process of restructuring. At that time, the company's chief supply chain officer was a former Dell executive; the acting chief sales officer, chief product officer and design director were all from Nike Inc and Adidas; the chief marketing officer was from GENERALMILLS and had the work experience of Procter & Gamble Co and Johnson & Johnson; and the chief talent officer came from Henkel. CFO Zeng Huafeng was also one of the reinforcements moved by Li Ning Co. Ltd. during the reform period.

At the end of 2014, Jin Zhenjun, soon after taking office as CEO, left the stage sadly, Li Ning Co. Ltd. himself took the helm again, and the company returned to the slogan "anything is possible". At the same time, at the annual performance conference, Zeng Huafeng was also accompanied by Li Ning Co. Ltd. to respond to questions from the media and investors. Zeng Huafeng was the most concerned management except Li Ning Co. Ltd..

From 2015 to now, it has been regarded as the recovery growth stage of Li Ning Co. Ltd. Company. Li Ning Co. Ltd., which lost money one after another, made a profit in 2015. Li Ning Co. Ltd. 's annual revenue rose 17% year-on-year to 7.089 billion yuan, with a net profit of 14.31 million yuan.

But this is far from enough for Li Ning Co. Ltd. in the transitional period, and it takes funds to continue to implement the transformation. At this time, Zeng Huafeng, as the chief financial officer, has become the strong backing of Li Ning Co. Ltd. company. In October 2015, Li Ning Co. Ltd. announced plans to sell 10 per cent of its shares to Viva China for 124 million yuan, a deal designed to replenish Li Ning Co. Ltd. 's continued transformation.

By the time the transaction was completed at the end of 2016, Li Ning Co. Ltd. received 330 million yuan in pre-tax income from the transaction. Li Ning Co. Ltd. 's net profit for that year increased from 14.31 million yuan in the previous year to 643 million yuan, and its operating cash flow increased to 995 million yuan. The cash cycle shortened from 76 days in 2015 to 59 days in 2016.

Over the next few years, Li Ning Co. Ltd. 's transformation was smoother and gradually paid off. From 2015 to 2018, income and net profit were growing, with an average annual compound growth rate of 11.59% and 498.91%, respectively.

In addition, according to the annual report data, in the nearly 10 years since Zeng Huafeng served as CFO, Li Ning Co. Ltd. 's operating cash flow has changed from net outflow to net inflow, from 2015 to 2019, 687 million yuan, 995 million yuan, 1.159 billion yuan, 1.672 billion yuan, 3.503 billion yuan respectively; affected by the epidemic, it dropped to 2.763 billion yuan in 2020, and rebounded again to 6.525 billion yuan in 2021.

Li Ning Co. Ltd., who is selling more and more expensive, has lost the first place.

Although compared with ten years ago, Li Ning Co. Ltd. has gradually stepped into a stable development track, but he lags behind Nike Inc, Adidas and even Anta. Li Ning Co. Ltd. is no longer brilliant.

According to the annual report, 2020.HK surpassed Li Ning Co. Ltd. in revenue, gross profit and net profit for the first time in 2012, and Li Ning Co. Ltd. has not surpassed since. At that time, there were media reports that Li Ning Co. Ltd. had asked internally, "Why can the Jinjiang brand catch up with us in two or three years?"

In fact, after several terms of CEO leadership, Li Ning Co. Ltd. has tried to change.

In 2018, "Li Ning Co. Ltd. of China" appeared in New York Fashion week, which kicked off the revival of the national tide. In the same year, Li Ning Co. Ltd. put forward the strategy of "single brand, multi-category, multi-channel" for the first time, at the same time, began to focus on improving gross profit margin and same-store efficiency; in 2019, Li Ning Co. Ltd. introduced Qian Wei, a former Uniqlo executive and Japanese Chinese, as joint CEO and asked it to optimize the company's existing retail model.

It is worth mentioning that from Jin Zhenjun, a Chinese-American, to Qian Wei, a Chinese-Japanese, Li Ning Co. Ltd. was once considered to be too dependent on foreign professional managers, revealing Li Ning Co. Ltd. 's attempt to internationalize.

Ma Gang, an analyst in the clothing industry, told time Finance that Li Ning Co. Ltd. has found a new way different from other enterprises from the perspective of management efficiency and product operation in the past seven years. From 2015 to 2021, Li Ning Co. Ltd. 's revenue increased from 7.089 billion yuan to 22.572 billion yuan, net profit from 14.31 million yuan to 4.01 billion yuan, and gross profit margin from 44.6% to 53%.

However, from the point of view of the capital markets, Li Ning Co. Ltd. still lacks attractive stories. Investors who have long studied the capital market told time Finance, "Anta not only has a better performance than Li Ning Co. Ltd., but also has more stories in the capital market, and several brands acquired are all good."

In fact, compared with Anta, which has successively acquired international brands such as FILA, Disante, Spandi and Kelong in recent years, Li Ning Co. Ltd., who adheres to the single-brand strategy, is indeed unimpressive in the acquisition, and more often comes to extraordinary China.

A few days ago, extraordinary China, the largest shareholder of Li Ning Co. Ltd., formally passed the transaction of acquiring British footwear brand Clarks. After 2020, extraordinary China has successively acquired Hong Kong local brand Bossini and Italian century-old brand Amedeo Testoni, but it is still a long way from FILA in terms of brand influence.

June 30, extraordinary China submitted to the Hong Kong Stock Exchange from GEM to the motherboard listing application, and simultaneously submitted the relevant IPO prospectus. Li Ning Co. Ltd. himself is the chairman and chief executive of extraordinary China. This is the third time that Viva China has submitted an application for transfer listing to the Hong Kong Stock Exchange after the two applications expired in January and July 2018. If the listing is successful, it will also become the second listed brand at the helm of Li Ning Co. Ltd. himself.

Although Li Ning Co. Ltd. decided on a "single brand" strategy in 2018. But it seems that Li Ning Co. Ltd. himself still has a multi-brand dream. Ma Gang believes that whether it is a listing or an acquisition, "it can be understood that Li Ning Co. Ltd. 's target is Anta's FILA, while extraordinary China's target is Anta Group."

However, Magang also said that he is not optimistic about the brands acquired by VIP China. "Times have changed, and the needs of consumers have changed. These acquired brands are not attractive to domestic consumers, unless they are internationalized, but whether it is extraordinary China or Li Ning Co. Ltd., repeated internationalization has not achieved very good results, at least in the short term, this ability is not easy to develop. "

At the same time, on the road of internationalization strategy, Li Ning Co. Ltd. also tries to build a high-end brand, which can be seen from the Chinese Li Ning Co. Ltd. brand.

According to previous reports from time Finance, at the end of last year, Li Ning Co. Ltd. officially released a new independent high-end sports fashion product line, LI-NING1990, which once again raised the price ceiling. According to LI-NING1990 Tmall's flagship store, the retail price of the most expensive and medium-length overcoat for women in the Chuangxingxian series has reached 4599 yuan. Of the 225 items in the store, more than half sell for more than 1,000 yuan, and a pair of classic socks retail for as much as 110yuan.

After more than 30 years of establishment, although Li Ning Co. Ltd. 's brand halo continues to help the company, with the rise of more and more domestic sports brands, Li Ning Co. Ltd., who has lost the number one throne of domestic sports brands, is not only facing the impact of international brands such as Nike Inc and Adidas, but also dealing with competition from domestic counterparts. The slogan "anything is possible" may not be so easy for a business.