Performance Express | Li Ning's gross margin has finally rebounded

Author | Xie Yunzi

Editor | Zhang Fan

Against the backdrop of slowing growth across the entire sports industry, Li Ning has delivered a report card featuring both rising revenue and growing profits.

In the first half of the year, Li Ning's revenue reached 15.235 billion RMB, up 2.8% year on year; net profit attributable to shareholders stood at 1.816 billion RMB, up about 4.5% year on year; gross margin rose 0.9 percentage points to 50.9%.

Looking back at the gross margin trend in Li Ning's semi-annual report: after hitting a high of 55.89% in the first half of 2021, it declined consecutively in 2022 and 2023 to 48.78%. In the first half of 2024, the gross margin rebounded to 50.44%, and fell back to 50.04% in the same period last year.

This also means that the increase in gross margin in the first half of 2026 is a further stabilization above the 50% threshold.

36Kr Chart based on Wind data

Against the background that the entire industry generally relies on deeper discounts to boost revenue, the fact that Li Ning's gross margin has risen instead of falling has become one of the most noteworthy signals.

For this improvement, Zhao Dongsheng, Chief Financial Officer of Li Ning Group, gave a detailed breakdown: the cost optimization of the wholesale business contributed 0.8 percentage points, the product mix optimization of the e-commerce channel contributed 0.2 percentage points, while the gross margin of the direct sales channel decreased slightly by 0.3 percentage points due to intensified promotion competition.

In other words, the profit improvement mainly comes from cost control and channel structure optimization, rather than terminal price increases.

However, this financial report is not all optimistic.

During the reporting period, Li Ning's sales and distribution expenses increased by 8.1% year on year to 4.64 billion RMB, with the expense ratio rising to 30.5%; advertising and marketing expenses increased by 377 million RMB year on year; operating profit margin fell by 0.4 percentage points to 16.1%. The expense growth rate exceeding the revenue growth rate may be one of the factors dragging down the operating profit margin.

Screenshot from Li Ning's financial report

By business segment, basketball — especially the cooperation with Stephen Curry — has become the most noteworthy investment layout of Li Ning and even the entire industry in the first half of the year.

On June 2, 2026, Li Ning officially announced a cooperation with Stephen Curry, four-time NBA champion and Olympic gold medalist, and his personal brand Curry Brand. This is a 10-year contract with an estimated value of more than 400 million US dollars in the industry, and the significance of the cooperation far exceeds the traditional star endorsement model.

Qian Wei, Executive Director and Co-President of Li Ning Group, said at the performance meeting that the deep binding between the two sides at the brand strategic level is different from the short-term traffic strategy of traditional star endorsements that only focus on launching shoes and holding activities, which requires long-term operation and phased promotion.

"This time our cooperation with Curry and Curry Brand is not limited to the traditional model of a brand signing an athlete. Through strategic cooperation, we hope that Curry and Curry Brand can not only empower Li Ning's basketball category, but also empower the entire Li Ning brand through all-round, systematic and strategic cooperation."

Screenshot from Li Ning's financial presentation materials

Image from official Weibo account

However, Li Ning's basketball business itself is still in the adjustment period.

Following a 19% year-on-year decline in the annual revenue of the basketball segment in 2025, the retail revenue continued to drop by 13% year on year in the first half of 2026.

Qian Wei admitted that there are two reasons for the sluggish performance of the basketball category: on the one hand, the overall basketball market has entered a relatively sluggish state, which is not a problem exclusive to Li Ning; on the other hand, the company has taken the initiative to control volume, avoid disordered pricing, and actively control order placement to maintain the professionalism of the brand.

Different from the active adjustment of the basketball segment, the running business shows a completely different picture.

In the first half of 2026, the retail revenue of Li Ning's running business accounted for 32% of the total. Although affected by the same industry demand fluctuation, the running business declined by 3% year on year, the sales of professional running shoes exceeded 14.8 million pairs. Among them, the Feidian family series of running shoes have won a total of 304 championships, and ranked first in market share with 28 places in the top 100 men's list of Chinese marathons.

In terms of event layout, since 2026, Li Ning has added cooperation with Chengdu Marathon. So far, the company has completed the layout of five top marathon events in four major regions across China.

Behind the competitiveness maintained by the running business is Li Ning's more than ten years of R&D accumulation.

Over the past decade, Li Ning's total R&D investment has exceeded 4 billion RMB. In the first half of this year, the company's self-developed "Super Boom Capsule" technology has been fully commercialized and applied to core running shoe series such as Feidian and Chitu.

Image from official Weibo account

Beyond the core categories, the outdoor and Gold Label series have become the incremental highlights in the first half of the year.

In the first half of the year, the retail revenue of Li Ning's comprehensive training category increased by 5% year on year. Among them, the Gold Label series, benefiting from the exposure of the Milan Winter Olympics, contributed incremental elasticity to the apparel segment. Qian Wei pointed out that the two emerging categories of outdoor and Gold Label have huge development space. Although their scale is still small, they "cannot be underestimated". Li Ning hopes to establish the profit model and operation model of independent channels for outdoor and Gold Label as soon as possible.

At the same time, the cooperation with the Chinese Olympic Committee is another long-term main line.

On the evening of August 3, Li Ning officially released the full set of award-winning equipment for the Chinese sports delegation of the 20th Asian Games 2026. With the design theme of "Glittering Starlight", the award-winning equipment is equipped with aerospace temperature control fiber technology. The press conference also reproduced the classic scene of the 1990 Beijing Asian Games torch relay. It is a clear fact that the in-depth cooperation with the Chinese Olympic Committee will maximize and consolidate Li Ning's image as a national sports brand.

However, looking ahead to the second half of the year, the outlook is not optimistic.

In the first half of 2026, the total retail sales of consumer goods increased by only 1.3% year on year, and the retail sales of sports and entertainment supplies in the second quarter decreased by 2.2% year on year. The revenue of sports brands generally weakened quarter on quarter in the second quarter, and Li Ning was no exception — the average daily passenger flow of offline single stores fell by a mid-single-digit percentage, and offline discounts deepened by about 3.5 percentage points.

In terms of store performance in the first half of the year, the average monthly store efficiency was 284,000 RMB, compared with 300,000 RMB in the same period last year, and the total store area remained basically unchanged.

Qian Wei said frankly: "The performance in Q1 was relatively good, but the performance in Q2 was far lower than expected. The challenging trend of performance from July to August has not changed." Based on this, Li Ning lowered its full-year revenue growth target from the "high single-digit" at the beginning of the year to "low single-digit", and the net profit margin target was also reduced to the mid-to-high single-digit level.

Interestingly, Pop Mart, which also released its interim financial report in the same period, the management also clearly stated that "the pressure in the second half of the year will only be greater".

 In the industry winter of "strong supply and weak demand", leading consumer enterprises with a certain scale may also need to maintain the stability of their basic market while realizing the conversion of immediate business. However, Li Ning's cooperation with Curry and the deep binding with the Chinese Olympic Committee are both strategic investments focusing on medium and long-term value. Whether this path can be realized depends on the longer-term future.

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