Nomura: Li Ning's sales recovery in the fourth quarter last year may be difficult to sustain

Nomura published a report stating that Li Ning (02331.HK) may find it difficult to sustain sales momentum in the fourth quarter of 2025. The sales improvement in the fourth quarter of last year was mainly driven by holiday demand, and momentum has significantly weakened entering winter and the beginning of 2026, raising doubts about the sustainability of the recovery.

The report indicated that Li Ning announced its operational data for the fourth quarter of 2025, showing that while sales regained some momentum, they still recorded an overall year-on-year decline. The company's overall sales in the fourth quarter of 2025 recorded a low single-digit year-on-year decline, narrowing from the mid-single-digit decline in the third quarter of 2025, mainly benefiting from improved sales performance during the National Day and Mid-Autumn Festival holidays.

However, the report noted that Li Ning's management indicated that sales in November and December 2025 have shown a gradual weakening trend. To accelerate inventory reduction, the company has had to increase discount levels and adopt more aggressive promotional strategies. Additionally, the company stated that there have been no significant signs of improvement in sales from the beginning of 2026 to date, and discount levels are continuing to deepen. The firm raised its target price for Li Ning from HKD 19.8 to HKD 20.4, maintaining a "Neutral" rating