Chinese sports wear brand Li Ning not only saw its shares tumble, but has lost its position as erstwhile favorite. Business analyst Shaun Rein is not very hopeful for its recovery in the short term, and expects an upsurge not before 2015 for the sport apparel sector as a whole, he tells Reuters.
China’s economic slowdown has resulted in inflated stock levels and depressed earnings for retailers including local and foreign sportswear players – a sharp reversal of fortune after an expansion blitz that followed the 2008 Beijing Olympics.
“I am very bearish and very gloomy on the sports apparel sector in 2013 in China,” said Shaun Rein, managing director at China Market Research Group. “It’s going to be 2015 before we can see any kind of recovery.”…
“[Li Ning’s] market share is collapsing in China,” China Market Research Group’s Rein said, adding that Li Ning was losing out to Nike Inc and would also cede market share to 361 and Xtep. “They no longer look (likely) to become a global player because if they don’t make changes, in a year or two they won’t even be a player in China.”
The Li family currently holds 25.23 percent of the company, while TPG and GIC each own about 5 percent with the ability to raise that to a combined holding of about 20 percent over the next five years by converting bonds into shares.
“After TPG invested in it, I said they have a 3 to 6-month time frame to show the market they are changing things, and they haven’t changed it,” Rein said. “I don’t think TPG is as good as they think they are at managing consumer brands.”
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