Net profit for Li-Ning in the first half of this year fell 3.1 per cent from a year ago to 1.402 billion yuan ($293 million) despite a 13 percent increase in revenue to 2.12 billion yuan.

“However, the growth was partly driven by 336 store openings,” Bernstein analyst Melinda Hu pointed out in a note. “At the [same store sales growth] level, revenue declined low single digits year over year, of which direct retail grew [about] 5 percent, but wholesale and e-commerce declined low single-digit and mid-teens respectively.”

The company’s gross profit margin declined to 48.8 percent from 50 percent due to steeper online discounts. As China reopened from Covid-19 lockdowns, people turned to more brick and mortar shopping forcing the company to give out more deals online to attract customers.

Running products grew 33 percent year over year for the period, contributing nearly a quarter of total revenue, however basketball products, which comprise nearly 28 percent of the company’s sales, only grew by 6 percent, below internal targets due to fierce competition.

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