Investors, good morning. Welcome to Li Ning Company Limited 2021 annual report presentation. Today, we will do this presentation via webcast and also Zoom. You may be able to see our presentation on Zoom and the PPT can be downloaded from the website. At the same time, we offer simultaneous interpretation into English and Chinese. Let me introduce our management. Executive Chairman and Joint CEO, Mr. Li Ning. Joint CEO, Mr. Kosaka Takeshi. CFO, Mr. Terence Tsang. In today's presentation, first of all, our CFO, Mr. Terence Tsang, will go through a financial review. After that, our Executive Chairman and Joint CEO, Mr. Li Ning, will go through our strategic directions. After that, Mr. Kosaka Takeshi will go through our operational highlights and progress. Finally, there will be a Q&A session. You are welcome to ask questions.
If you want to ask questions, please use the raise hand function on Zoom. Now let me defer to our management.
Good morning. Thank you and welcome everyone. During 2021, along with the recovery of the negative impact from COVID-19 and the high recognition and support towards local sports brands, as well as the continued operational improvement that we implemented, we have achieved solid performance, both financially and operationally. Financially, we were able to achieve a net profit margin improvement of 610 basis points to reach 17.8% with our revenues up 56%. Such improvement was mainly driven by 3.9 percentage points in gross margin expansion, as well as 4.1 percentage points in expense ratio reduction. Our operating cash flow increased over 136% to CNY 6.5 billion, and adding in the net proceeds from top-up placing, our net cash increased CNY 11 billion- CNY 18.48 billion compared to same period last year.
While revenues went up by 56%, our average gross working capital was up only 10%, and our cash conversion cycle remained flat at a very efficient level of 20 days. Operationally, we achieved high 50s growth in our retail sell-through for total platform, including both online and offline channels for the LI-NING core brand. Our channel inventory increased low 30s compared to the high 50s sell-through increase, further improve our inventory turnover with enhanced aging structure. Our new product performed very well with retail sell-through in the offline channel, register a high 60s increase, coupled with approximately 350 basis points improvement in retail discount rates compared to the same period last year. Our new product sell-through mix further improved 7 percentage points to 86%.
New product sell-out rates for both three-month and six-month improved by approximately 13 and 14 percentage points, respectively, compared to the same period last year. Even compared to same period in 2019, sell-out rates also improved over 12 and 10 percentage points for both three-month and six-month period, respectively. Clearly, you can see our greatly improved performance in the general operation during the year. Now, let's take a look at the revenues. During 2021, our revenues rose 56%, with all categories growing healthy across the board, driving the increase. Our balanced channel strategy for LI-NING core brand between wholesale and the direct-to-consumer channels, which is also known as the DTC, has played a very important part at times like this. With all channels performing well, the mix remained relatively unchanged with DTC mix up 1 point to 53% during the comparable period.
This stable mix across all channels validates the improvement of our product offering as well as the LI-NING brand strength. On the right-hand side of the slide, you can see that our sell-through from new products category aged six months or less improved by 7 points to 86%. As I said before, a healthy retailer should be at the mid-80s level, and we are encouraged to hit that initial target during 2021. We shall continue to strive for further improvement in this area as we continue with our retail operation capabilities optimization. Coming to the same-store sales performance. As there's no offline store that opened throughout Q1 last year, hence, we will just discuss the Q2 to Q4 performance.
Our overall same-store sales for the three quarters increased low 40s%. With offline SSSG stood at high 30s% increase, driven by mid-40s% increase in direct retail, as well as a mid-30s% increase in the wholesale channel. Meanwhile, our online SSSG for the full year accelerated to high 40s%. As you can see, our revenues increase is driven by a healthy organic sell-through growth in all channels. As far as our channel strategy is concerned, the number of stores for total platforms stood at 7,137. An increase of 204 stores as compared to end of 2020. Of this increase, LI-NING core brand accounted for 23 stores, while LI-NING YOUNG contributed 181 stores during the last twelve months.
As we continued with our channel optimization of closing the below standard stores and expansion of bigger high productivity store, our selling square footage for core LI-NING brand actually went up by approximately 20% compared to end of 2020. From the sell-through standpoint, with our e-commerce expansion strategy driving a high 60s% growth, the total online and offline sell-through grew by high 50s% and continued to break new high. Our offline channel recorded a growth of mid-50s%, driven by low-teens% increase in average selling price, as well as low-40s% growth in unit volume. Wholesale of LI-NING brand, excluding international and LI-NING YOUNG channel, saw a 55% increase, with the number of stores increased 7% over the same period last year.
On the right-hand side of this slide, you can see our core wholesaler sell-through increased by mid-50s%, which compared to the high 50s% growth in, demonstrating our sell-through and channel inventory focus and our wholesale business priority. Moving on to retail channel. The revenues of directly managed stores grew 52%, with 16 stores increase in ending store count compared with end of 2020. The revenues growth was largely driven by the existing stores increase in productivity. As you can see from the right-hand side of this slide, the increased revenues from the existing stores contributed CNY 1.37 billion, accounting for 81% of the total increase. We believe in addition to the macro and market dynamics, impressive growth is also driven by our continued improvement in our retail operations as well as merchandise.
This can be witnessed by the fact that the major key performance indexes, such as completion rate, unit per transaction, retail discount, as well as sell-out rate, all improved during the year. Consequently, our four-wall contribution margin rate improved to mid-20s, which has been the highest we ever achieved annually in the recent years. Turning to gross margin. Our gross margin accelerated 3.9 percentage points. The major drivers were improvement in e-commerce gross margin resulted from improved retail discount rate contributing 2 percentage point. Improvement in gross margin in direct retail due primarily in improvement in discounts on new products as well as the improvement of new and old product mix in our retail sell-through, contributing 0.9 percentage point. Reduction in R&D costs as a percentage of revenues, adding 0.3 percentage point.
Improvement in all other wholesale business units such as badminton and soccer, contributing 0.7 percentage points. Now, let me walk you through the profitability analysis. Driven by a 56% increase in revenues and 3.9 percentage points improvement in gross margin rate, we saw a CNY 4.88 billion addition in gross profit. As far as expenses are concerned, we carry out disciplined cost control and variable costs to ensure better leverage. As you can see from this slide, the total sales-related variable costs such as commissions, direct store expenses, as well as logistics costs, increased a total of CNY 1.14 billion, representing 14% of incremental revenues, which is efficient considering our variable cost structure.
Even with such a high revenue growth, we still have our cost control focus on productive spending only, making sure there is a good return on investment. Our advertising and promotion expenses increased CNY 499 million or 39%, compared to a much reduced spending level during last year. As a percentage of revenue, it stood at 7.9% of revenues, down from the 8.9% of revenues in the comparable period. Other platform expenses increased CNY 344 million, mainly due to the increase in incentives resulted from our over target performance. Our other income and interest increased CNY 189 million, mainly due to increase in share of profit from investment as well as interest income due to much higher net cash balance during the comparable period.
Consequently, our net margin improved by 6.1 percentage points to 17.8% from 11%. Our net income increased CNY 2.31 billion or 136% to CNY 4.01 billion. Moving on to channel inventory. Our channel inventory increased approximately 30% to support a high 50s growth in retail sell-through. Consequently, our inventory turnover cycle has further improved to 3.9 months. More importantly, our effort is more evident if you look at the aging. The proportion of inventory aged over six months improved to 8% from 22% a year ago, a remarkable 14 percentage point improvement. While we are pleased by this improvement, we also understand this industry is very volatile as inventory aging can deteriorate quickly if not managed intensely.
At the company level, our gross inventory increased 28% to support a 56% increase in revenue. The proportion of inventory aged over six months declined 10 percentage points to 18% from 28% in the comparable period last year. This result validated the effectiveness of our inventory control. This improved aging structure provides a good foundation for sustainable, healthy business growth. While we are pleased with both our channel and company inventory management effectiveness, now we need to focus even more on the efficiency of the inventory. Simply put, is to drive continued healthy business growth with more productive inventory. As far as trade receivables are concerned, our gross trade receivable increased 18% in relation to the 56% revenue growth, further improve our receivable turnover days to a remarkable 13 days level.
On the right-hand side of the slide, you can see the mix of current receivables that's improved to 83% from 72% in the comparable period. As far as working capital efficiency is concerned, we continued our trend of improvement since 2015, and our working capital remained at a very healthy level. Gross average working capital was up by 10.5% to support 56% growth in revenue. As a result, the working capital as a percentage of our revenue further declined by 2 percentage points to 6%, giving us sufficient resource to capitalize on future growth opportunities. We capitalize on the impressive revenues and retail sell-through increase and convert that into substantial operating cash flow growth.
Adding the CNY 8.57 billion net proceeds from the top-up placing completed on November 2020 to CNY 18.48 billion in the comparable period. We will be making further appropriate investment in our brand elevation, infrastructure, as well as operations and organization improvement to support a consistent, healthy business growth, as well as to capitalize on the upside growth opportunities in this market, particularly at the current state of economy. The board of directors has recommended a dividend of CNY 1.2 billion or CNY 0.4597 per share upon shareholders' approval. This represent 30% payout ratio on the net income. In conclusion, we are pleased with the 2021 result and the progress of the operations improvement.
We recognize the macro and market dynamics has played a big part in the results, particularly in the first half. Make no mistake, our brand strength improvement in products and operations definitely played a significant part of the 2021 results. Specifically, we have put ourselves in a solid cash flow and net cash position. We have a very healthy working capital structure with improved aging in inventory and receivables. More importantly, we have a strong and differentiated brand as our core competence. Our single market focus had put us in a relatively less exposure to geopolitical uncertainties, though not immune. Looking forward, we expect 2022 a year of risk and opportunities. With geopolitical uncertainties and the fact that COVID-19 is not over and still unstable, as well as supply chain challenge and inflation pressure on cost.
All these are riding on the backdrop of a very strong base, partially driven by the market dynamics in 2021. Hence, we need to remain prudently conservative with our 2022 targets, particularly with the recent resurgence of COVID-19 and lockdown in certain cities in China. We are looking at a target of top-line growth at high- teens% to low- twenties%, and net profit margin remain at high- teens%. Now, Chairman will walk you through our strategic direction. Thank you.
Thank you, Terence. Now I'm going to present to you our business in 2021 and also our strategies. In 2021, Chinese economy was stable and started to recover, and control of the pandemic has been orderly. Under the state's leadership, people's health consciousness has been enhanced, so their passion for sportswear products has been strong. At the same time, the Tokyo Olympics and Beijing Winter Olympics organization has raised people's awareness in relation to healthy life and sports. Mainland consumers are giving more recognition and support to homegrown sportswear brands. For LI-NING brand, there are good opportunities for us to further enhance our influence. Given this backdrop, we continue to create and improve the LI-NING style, experience, and value, so that we can enhance consumer experience, and there is much better brand resilience as a result.
In 2021, we continue to deepen single brand, multi-categories, diversified channels strategy. We enriched the professional product system and we integrated diversified fashion trends. With a multi-category matrix and diversified channels layout, we improved our business model. We continue to dig deep into different categories and our target markets to enhance our brand competitiveness. In 2021, our core categories, whole platform retail sell-through grew 59%. For sports casual category, it continued to perform very well. For the whole year, retail sell-through growth was 71%. For professional categories, running and fitness categories, growth improved significantly. This time, basketball continued to maintain strong growth rates.
For other categories centered around basketball, badminton, table tennis and football, well, for revenue for the whole year, there's 14% growth, and they are mainly sourced via specialty stores and professional channels. On specific categories, basketball continued to deepen professional product matrix. We integrated technology, basketball style resources and apparel and footwear story package. Our products cover both training grounds as well as the race ground. There are very excellent practice products, so we are able to seize many basketball fans' attention. Besides, with the BADFIVE series, we're able to create a street basketball culture, and we integrated into Chinese city culture and sports leisure interesting elements so that we are able to attract the YOUNG fashion lovers.
For running, we use LI-NING BOOM Technology platform as the core, and we realized the transformation of professionalism. We concentrated on raising high resilience protection and super light series to unlock diversified use scenarios. Within the year, we made wide use of the LI-NING BOOM Technology. Right now, for BOOM Technology running shoes, the price range is already at CNY 1000 high-end price range, and it is also being extended to the CNY 400-CNY 500 mass price level. In other words, we have both elite runners as well as amateur runners as our markets, and we want more people and the mass consumers to identify LI-NING as first choice. We continue to pay attention to niche markets, and we seize female fitness markets.
We signed a contract with top-tier Chinese actress Zhong Chuxi as our sports image ambassador. We focus on yoga, CrossFit, and dance. These are some female sports areas we wanted to reinforce our professional fitness image. In terms of material science, we continued to upgrade the protective equipment, which are wind-resistant and splash-resistant. We rejuvenated our products, and we shaped very lively functional products. Besides, there is demand from gym-related fitness items. For the first time, we made use of the LI-NING BOOM Technology in fitness shoes. Especially, we upgraded No Boundaries III fitness shoes. For sports casual, we very precisely captured consumers' needs in sports leisure area. We created original and also classic IP, and we made a layout on skateboarding, Rich Everyday and classic multicolor series.
We continue to interact with YOUNG consumers. Among YOUNG consumers, we have enhanced our brand influence. We continued to reinforce our professional sponsorship resource matrix. For some high-level races and athletes sponsorship, we put in a lot of resources. We work together with CBA Basketball League and also Qingdao Marathon. In the areas of running, basketball, badminton, and table tennis, we sponsored champion athletes and teams. We helped the professional athletes to achieve very good performance in races and leagues. As a result, both sales and also attention given to the leading brand has been enhanced.
With more and more attention being paid to the Winter Olympics and winter sports games, we are going to sponsor athletes for snowboard and ice skating, and we will then expand our professional sponsorship layout for our brand. We continue to work with artists, celebrities, and different brands in crossover. Artistic design, street fashion, and Chinese Kung fu elements are incorporated into our products, so consumers in different circles and segments will know our brand philosophy. Our brand image can expand to diversified consumer groups. In 2021, in Hainan, Sanya, we organized the Power of Thoughts Fashion Music Festival. The background is winter beach and sunlight. Sports, avant-garde music and installation art, youth culture, and LI-NING new products are being incorporated and integrated. There is a very fun carnival on that coastal island.
In terms of Chinese culture, sports DNA and fashion, we deepened our exploration into these three elements. We wanted to showcase the Power of Thoughts of LI-NING brand. We broke through exploration, the use of exploration and spiritual elements. That's all in relation to our major strategies. For the way forward now, I'll defer to our CEO, Mr. Qian Wei. Thank you, Chairman.
Good morning. I am Qian Wei. Now, I am going to talk about our 2021 operation progress. I'm going to make a report on that. Last year, we continued to follow our core business development strategy. For products, channels, e-commerce, retail, supply chain, and kidswear, we improved the efficiency for all these segments. While we maintained high revenue growth, we focused on enhancing operating efficiency.
We improved discount rates and sell-out rates, and when production costs rose, we are able to lower the expense ratio and improve gross margin. At the same time, we created a muscular organization, and we did away with unnecessary expenses to optimize our operating profit margin. For the whole year, net profit margin was 17.8%, up 6.1 percentage points, and the growth in net profit was 136%. For our strategy, next page. We focused on efficiency enhancement, and we wanted to achieve a muscular organization, so we built sustainable development. At the same time, we wanted to enhance or maintain our high earnings capability. We continued to strengthen our competitiveness. We focused on consumers, markets, products, and point-of-sale merchandising. From wholesale to retail operation model change.
In the past one-two years, we continued to go for product merchandise, inventory, store operation, channel, cost, and organizational structure efficiency enhancement. With the above strategies in 2021, in various business segments, we saw significant improvements. Now I'm going to elaborate on progress and achievements made in 2021. Concerning product operation, we continue to enhance our product management capability, and we completed our product planning system. We improved efficiency. At the same time, this can also drive business growth. We have monthly sales plan and also weekly sales review. Merchandise, point of sale, marketing, inventory are the core elements, and we regularly do review and optimization. Product sales plan is being implemented in directly operated provinces and regions, cities and retail outlets. We enhanced the synergy between wholesale plan and also customers.
We also narrowed the product breadth, and we improved the depth. In this way, we enhanced the product mix so that new product discount and product efficiency is being improved. There is a very systematic plan to enhance sell-out rates and discount rates. As at the end of the year, there is a high single-digit decrease in the product breadth and depth increase, mid-range of 60%-70%. New product discount 20% or above. Sell-out rate more than 60%. For inventory, overall speaking, inventory control is being done. We optimize inventory structure. At the end, we use reasonable inventory to do better business. Besides, we clarified the monthly inventory targets for different business units, and we followed up on inventory management progress, and we did inventory sharing in the whole company.
We digested old and poor-selling products, and we make sure that the new product inventory management is reasonable. We improve stores' inventory efficiency and strengthen new product supply protection and product delivery management. By having a through chain, from entry into warehouse, product delivery, product reaching the stores, and so on, all these are transparent so that we can take actions very promptly. As of the end of the year, inventory increased 20%-30% high range, but then new and old inventory structure is optimized. For inventory over 12 months, their share is down to high single digits. We continue our strategy on high-quality efficient stores. We expedited our store opening optimization. We lower the rent over sales ratio. We improved our store image and quality.
We expedited the closing of low productivity and loss-making stores, and we accelerated the opening of higher productivity stores. As of the end of the year, total selling square footage increased high double-digit rates and single store average selling footage more than 200 sq.m . For single store monthly store productivity up 50%-60% high end. For big stores there are more than 1,200 stores, and for the area of big store more than 410 sq. m. Monthly average store productivity CNY 600,000. We enhanced the high-tier cities' share. We continue to create regional market with high potential and capacity. We expedited the low-tier market layout of big stores. For those stores opened before nineteen...
In 2019 and also those under the seventh generation image store, we expedited the upgrading of image of these stores. For mega and also tier one city regular store, the retail sell-through contribution has risen to low single digit. Shopping mall sell-through contribution also rose to high single digits. We upgraded O2O integration. In 2021, we are able to deliver a high turnover business and strengthen product supply protection management. We improve our inventory management efficiency so that there is synergistic growth between online and offline. Online direct operation sell-through improved 60%-70% high range, and average discount rate also improved by high single digits. We improved the online ecosystem to make sure that our brand can have a good business environment online.
At the same time, we improved the self-operation channel efficiency online in 2021. For low productivity distributor store, the number is reduced to mid-range of 40%-50%. Online directly operated sell-through accounted for mid-single-digit share. We improved customer experience at the same time. As of the end of 2021, number of members exceeded 40 million. Member sales contribution was up low single digits or low double digits. For O2O omni-channel, store sales up 70%-80% high range. Our product and point of sale is our core and also efficiency. We improved single store operating efficiency. We attach importance to the development of retail talents, and we created a retail culture. We completed a single store operation model and retail target or standard system.
We enhanced the store efficiency, and we completed a retail operation manual and store operation journal so that there are rules to follow in managing the stores. For the directly operated subsidiary P&L review and reform system that was put in place, we built a wholesale synergy system and platform. We strengthened big store operation. We continue to improve performance of big store. At the same time, we started to open store of the brand new brand of LI-NING 1990. The first store in Beijing Fangzhuang performed better than expectation. In the first month of operation, sales exceeded CNY 2.5 million. This exceeded our expectation about LI-NING 1990. With all these measures, there was improvement in all retail indicators.
Overall, conversion rate was up low single-digit %, and then overall retail margin was up mid-single-digit %. Also, ASP increased double-digit% and per transaction up high double-digit %. We have already clarified a direct operation, high-efficiency store matrix and also synergy and upgrading of wholesale. In October 2021, for the first time, we achieved the first retail big store with retail sell-through of over CNY 10 million. With such a successful case and also coordination of different departments, we created a single store sales plan for high productivity stores. We also built a single store operation case for flagship stores. Now, this is also transferred to various big stores. We focus on provinces and main regions to build the big store matrix system.
When we are enhancing the system, we will put in place measures to aid these to our wholesalers. We want to improve customer operation efficiency. Between direct operation and big wholesale stores, we want to cover our core cities and business circles so that we can enhance our brand strength and performance. By making breakthrough in store productivity of big stores, we're able to improve our business together with our front, mid office and back end. Single store profitability enhanced and our retail end competitiveness can all improve. Distributors' earnings will improve, and by optimizing our sell-in discount, we hope to also improve wholesale business profitability. In terms of supply chain, our strategy is to turn passive production into active. We pay attention to upgrading of quality.
In terms of capacity, we increased capacity to satisfy supply increase so that more consumers will have the opportunity to experience LI-NING products. In 2021, overall, capacity of supply chain was up 50% for footwear. 50%-60% high range apparel. 40%-50% mid-range. For our business strategies and supplier matrix, we enhanced core suppliers share to ensure product quality. For core materials, there is cross-category use in order to enhance our efficiency and lower cost. There is an increase of suppliers to four suppliers or three- suppliers for footwear. For top three suppliers, they accounted for more than 40% for footwear. In terms of kidswear, we enhanced our professional kidswear image, and we drive efficiency and business growth.
We deepen our channels and optimize our channel discount. With LI-NING brand competitiveness, we improve our kidswear business, and we enhanced the share of professional elements. Together with customers, use scenarios, we optimized our product structure. In the year, total sell-through accounted for 70%-80% low-end growth, and then average selling price increased by high- teens%. Retail discount rate improved by mid-single-digit%. SSSG increased by mid-30s%. For kidswear products, we enhanced product management and improved sell-out rate and discount rates. For all products and poor selling products, digestion of them improved. We enhanced the product efficiency and channel efficiency. For new product, discount rates improved by mid-single-digit%. A new product 3-month sell-out rate improved by mid-teens%. For channels, we enhanced the expansion of self-operated stores, and we lowered the share of distributor customers.
We increased 200 sq. m. kidswear store, and we accelerated the closing of low productivity stores and enhanced channel efficiency. We will bring in retail style customers, and for low productivity customers, we will phase them out. We are doing a lot about kidswear, so online sales of kidswear will be managed by our e-commerce department. In this way, our operating efficiency can improve. Number of stores totaled 1,202. Average monthly store productivity up 50%. The above is our operating results and progress. In the future, we will continue to do more to enhance our operating efficiency. We want to enhance our sustainable earnings growth. Thank you very much.