BRIEF: Rising tax burden drags down Li Ning’s first-half profit

Sportswear maker Li Ning Co. Ltd. (2331.HK) announced on Thursday that its revenue for the first half of 2025 rose 3.3% year-on-year to 14.8 billion yuan ($2.06 billion), while its net profit dropped 11% to 1.74 billion yuan. The company declared an interim dividend of 0.3359 yuan per share, totaling 869 million yuan, down about 11% from a year earlier.

Li Ning said its revenue growth was driven mainly by a 7.4% increase in e-commerce sales and a 4.4% rise in revenue from franchised distributors. However, direct sales fell 3.4% due to store network adjustments and shifting consumption patterns, offsetting some of the gains. By product category, footwear revenue grew nearly 5%, equipment and accessories surged 23.7%, while apparel revenue declined 3.4%.

The profit decline owed mainly to a drop in gross margin and a higher tax burden. The company’s gross margin slipped to 50%, down 0.4 percentage points from a year earlier, as deeper discounts in direct sales and changes in the company’s channel mix weighed on its profitability. At the same time, Li Ning’s effective tax rate rose sharply to 33.3%, further squeezing earnings.

Li Ning’s stock opened higher on Friday and closed at HK$19.33 by the midday break, up 6.74%.

By Lee Shih Ta

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