Li Ning’s third-quarter sales remain weak: Direct retail improves, full-year growth target under pressure

Where did third-quarter sales improve, and where did they remain weak?

Li Ning brand retail sales fell by a low-single-digit percentage year on year in the third quarter of 2026, performing slightly better than major sportswear peers but below management expectations. Sales had already fallen by a mid-single-digit percentage year on year in the same period of 2025, making the comparison base relatively low.
By channel, direct retail sales were flat year on year, an improvement from a low-single-digit decline in the second quarter. Wholesale sales fell by a mid-single-digit percentage, a decline similar to that in the second quarter. Online sales grew by a high-single-digit percentage, faster than the mid-single-digit growth recorded in the second quarter.

Management maintained its guidance for mid-single-digit year-on-year sales growth for full-year 2026, but Nomura believes the likelihood of missing the target has increased. Reasons include intensifying competition in sportswear, potential price competition arising from channel adjustments by some major peers, and potentially warmer temperatures in the coming winter.
Nomura cut its 2026 revenue forecast from RMB 30.451 billion to RMB 30.083 billion, implying year-on-year growth of 1.6%, below the company’s mid-single-digit growth guidance.

Li Ning is investing in its brand through product technologies such as those used in running shoes, partnerships with athletes in fields including basketball and running, and sponsorship of major events. Nomura believes this can improve consumer awareness of the brand’s functionality and design, particularly in running and basketball.
However, sales momentum in the sportswear industry is currently weak, and Nomura believes these investments may struggle to generate satisfactory sales returns in the short term. The bank forecasts Li Ning’s 2026 net profit attributable to shareholders at RMB 2.265 billion, down 22.8% year on year, while revenue is expected to grow 1.6%.

Nomura cut its revenue forecasts for 2026–2028 by 1%–3% and its earnings forecasts by 1%–2%. It maintained a Neutral rating and lowered its target price from HK$13.80 to HK$13.40. Based on the closing price of HK$12.84 on 26 October, the target price implies approximately 4.4% upside.
The target price cut reflects lower earnings forecasts; the target price-to-earnings multiple Nomura uses for 2026 forecasts remains 13 times. The company has proposed a special dividend, which Nomura views positively; the proposal awaits shareholder approval on 5 November.