Analysts, investors, good morning. Welcome to Li Ning Company Limited's 2025 annual results announcement. First of all, let me introduce to you our management. Executive Chairman and Joint CEO, Mr. Li Ning. Executive Director and Joint CEO, Mr. Qian Wei . Group Vice President and CFO, Mr. Zhao Dongsheng. Today, our agenda is that Mr. Zhao will go through the 2025 financial review, and then the Chairman will talk about strategic direction, followed by Mr. Qian on operational highlights. There will be a Q&A. Mr. Zhao, please. Good morning, everyone. I am Zhao Dongsheng. Now I will walk you through our 2025 financial review. In 2025, we deepened our focus on our core business and strengthened our foundation, achieving the following results. Financially, our revenue was up 3.2%, reaching RMB 29.598 billion.
Gross margin decreased by 0.4 percentage point to 49%. Our company concentrated our resources on core business segments, strengthened brand value delivery, and continuously optimized cost efficiency through channel integration and refined operations, ultimately achieving net profit of RMB 2.936 billion and net profit margin of 9.9%. Overall liquidity remained strong, with net operating cash flow of RMB 4.852 billion. Average working capital as percentage of revenue was 7.7%. Cash conversion cycle was 37 days, an increase of two days compared to same period last year, maintaining a healthy level. The board of directors proposed a final dividend of HKD 0.2336 per share.
Combined with the interim dividend of HKD 0.3359 per share already paid, total annual dividend is HKD 0.5695 per share, with dividend payout ratio maintained at 50%, ensuring consistent shareholder returns. For operations, retail sell-through for Li-Ning core brand remained flat year-on-year across all channels. New product sell-through in physical stores accounted for 83% of total physical store sales, maintaining a reasonable level with healthy product efficiency. At year-end, omni-channel inventory to sales ratio was four months, with inventory levels and aging structure remaining healthy. Our group's revenue increased by 3.2% year-on-year, primarily driven by impressive growth in specialty categories, which fueled overall revenue growth. Among these, the running category maintained strong momentum, with revenue growing by over 10%.
Badminton category achieved a 30% revenue increase, supported by growing brand mindshare in the specialty market and ample production capacity. In 2025, the share of revenue across all channels remained balanced and healthy. Specifically, e-commerce revenue accounted for 31%, remaining stable. Direct retail revenue declined by 1 percentage point to 23% due to store structure optimization. Wholesale revenue was up 1 percentage point to 46%. New product sales from offline channels within the past six months accounted for 83% of total offline sales, remaining at a healthy and reasonable level. In terms of channels, the total number of POS in 2025 was 7,609, up 24 year-on-year. Among these, the number of Li-Ning brand stores decreased by 26, while number of Li-Ning Young POS was up 50.
During the year, overall domestic consumer demand remained in a gradual recovery phase, with offline sales continuing to face pressure, while e-commerce business also faced challenges of slowing growth and intensifying competition. Overall, sell-through remained flat year-on-year, with e-commerce sell-through growing mid-single-digit year-on-year. Offline sell-through declined by low single-digit year-on-year, with average offline retail prices slightly down year-on-year. Offline discount deepening by about 1 percentage point. Average unit price down low single-digit, while sales volume remained stable year-on-year. Li-Ning's wholesale business excluding Li-Ning Young saw a year-on-year increase of 33 POS, with full year revenue growing by 7% year-on-year. Revenue from specialty stores such as badminton and table tennis was up 22%, driving growth in wholesale revenue.
During the year, based on actual operating conditions at the retail level, our company reasonably adjusted the sell-in schedule for distributors, and wholesale channel maintained healthy. Excluding revenue from shipments to specialty channels, wholesale revenue was up low single-digit percentage, while wholesale sell-through declined a low single-digit percentage in a challenging consumer environment. Our core strategy is to make long-term investments in our distributor network. By establishing a distribution model and strengthening systematic management, we empower our partners to enhance operational quality and efficiency in key areas such as channels, merchandise, and retail, thereby creating sustainable value returns for the company. Number of direct retail POS was down 59 year-on-year. Revenue declined by 4% year-on-year. Decline in direct retail revenue was primarily due to reduction in number of stores resulting from store portfolio optimization.
In this challenging environment, we'll continue to focus on establishing a sustainable, high-efficiency, single-store operating model to drive efficiency improvement in our direct retail channel. During the year, gross margin was down 0.4 percentage point to 49%, mainly due to the following factors. One, direct retail channels. Weaker consumer demand led to deeper discounts, causing the group's gross margin to decline 0.3 percentage point. Two, wholesale business. Product mix adjustments and cost optimization contributed to a 0.2 percentage point increase in our gross margin. Three, DTC channels. A decline in their share of total sales caused the group's gross margin to decrease by 0.2 percentage point. Four, o ther business units. Channel restructuring caused the group's gross margin to decrease by 0.1 percentage point.
The 3.2% increase in revenue resulted in a RMB 333 million increase in gross profit. In terms of expense management, we maintained a focused strategy, allocating resources precisely to core growth areas to drive sustained release of long-term value. Thanks to our effective planning and continuous optimization of channel structure and expansion strategies, sales-related variable expenses decreased by a total of RMB 283 million. Specifically, variable expenses related to direct retail revenue decreased by RMB 285 million. Expenses related to e-commerce operations increased by RMB 6 million. Expenses related to logistics and new business initiatives down CNY 24 million. Advertising and marketing expenses increased by RMB 445 million, with expense ratio rising by 1.2 percentage points year-on-year to 10.7%.
Rise in marketing expenses was mainly due to new Olympic sponsorship costs. In 2026, we'll fully enter a full-fledged Olympic marketing year, which will also lead to a further increase in marketing expenses and the expense ratio for 2026. Other expenses increased by RMB 18 million. Other income and interest income decreased by RMB 73 million, primarily due to lower interest income resulting from declining interest rates. Income tax expense increased by RMB 157 million, mainly due to a combination of factors, including exchange rate fluctuations and returns on capital. We have implemented more rational planning of domestic and overseas capital structure, resulting in the provision of corresponding deferred income tax, which led to an increase in tax rate for the current year.
Overall, our operating profit margin rose by 0.4 percentage point from 12.8% in the same period last year to 13.2%. Net profit margin decreased by 0.6 percentage point from 10.5% last year to 9.9%, with profit margin performing better than expected. Regarding channel inventory, total channel inventory in 2025 increased by mid-single digit year-on-year, remaining at a reasonable level. Omnichannel inventory turnover was four months, and inventory structure remained healthy. Going forward, we'll continue to strengthen our supply chain responsiveness and through dynamic adjustments to our inventory strategy, adapt flexibly to rapid changes in market and consumer trends to ensure that omnichannel inventory structure and turnover rates remain healthy.
Regarding our inventory, the cost of inventory before provisions increased by 3% year-on-year in 2025, which is a reasonable increase relative to revenue growth of 3.2%. Overall inventory levels and age structure remain stable and healthy. This achievement is attributable to our ongoing efforts to advance refined management. Through detailed planning, flexible supply chain, and digital support, we have continuously optimized omnichannel inventory turnover and product lifecycle management, which has effectively supported the business's steady growth. Regarding trade receivables, compared to a 3.2% increase in revenue, our trade receivables before provisions rose by 36%. This was primarily due to e-commerce platforms making advanced payments in 2024, which led to a decrease in the accounts receivable balance at the end of 2024. In 2025, payment schedule of e-commerce platforms returned to normal.
Receivable days was 15 days, an increase compared to the previous year. Trade receivables remain at a reasonable and healthy level. Trade receivables due within 90 days maintained a healthy rate of 96%. Our support for strategic partners has always been grounded in the philosophy of mutual healthy growth. Thanks to our past strategic support for partners and our joint efforts, we have worked together to continuously optimize channel efficiency, helping channel partners maintain healthy operations and making the overall business ecosystem more robust. Our working capital remains at a healthy level, accounting for 7.7% of annual revenue, which provides us with ample resources to fuel business growth. Cash flow from operating activities remained robust and ample, with a net cash inflow of RMB 4.852 billion.
Net cash increased by RMB 1.81 billion year-over-year to RMB 19.974 billion. These ample cash reserves provide us with a solid financial foundation and flexible allocation capabilities, enabling us not only to effectively address operational pressures caused by market fluctuations, but also to swiftly capitalize on opportunities as they arise. In 2025, China's economy continued its overall stable and steadily improving development trajectory, though consumer confidence and demand remained in a phase of adjustment and recovery. Looking ahead to 2026, we will continue to deepen our expertise and strengthen our foundations, driving sustainable business growth through our core product categories while actively exploring new growth areas to enhance our brand's competitive edge and build momentum for further market share expansion. Based on this, we anticipate full-year revenue growth of high single-digit in 2026.
As we enter the second year of the Olympic sponsorship cycle, we'll continue to increase investment in brand building and specialized resources, as well as further strengthen our support for China's sports sector. Consequently, we expect the full year net profit margin to be in the high single-digit range. At the same time, we are fully confident in the medium to long-term development of China's sports footwear and apparel industry, as well as the Li-Ning brand. That concludes the financial section. Next, please welcome our chairman to review the key strategic directions for 2025. Thank you.
Thank you, Dongsheng. In 2025, the nationwide sports craze and the national strategy to build a sports power nation will jointly inject new momentum into the industry, driving continuous upgrading of sports consumption. Li-Ning Group remains committed to professional innovation as a core, continuously building and deepening the Li-Ning experience value.
As a steadfast participant, supporter, and practitioner of Chinese sports, the Li-Ning brand continues to contribute its strength. Throughout the year, we partnered with the Chinese Olympic Committee to support Chinese athletes in shining on the field of play, actively transforming the momentum of this collaboration into brand influence. At the same time, we helped ignite the nation's passion for sports, driving product and brand development through innovation to consolidate our market leadership and move forward hand in hand with China's sports sector. We continue to advance our single brand, multiple categories, diversified channel strategy. Driven by technological innovation and professional sports resources, we're making comprehensive strides across six core categories, running, basketball, training, badminton, table tennis, and sports casual, while successfully expanding into emerging segments such as outdoor sports, tennis, and pickleball to create new business opportunities.
In terms of channels, we are actively exploring new store formats such as Dragon stores and outdoor stores to reach consumers across multiple tiers with diverse needs, resulting in the continuous enhancement of our brand competitiveness and market influence.
In 2025, we continue to go in depth in the professional training area and set up more channels and to achieve better result in the retail. Among the running business is 10% up. Training category, 5% up. It shows the overall competitiveness of the product capacity in the core business markets. Basketball revenue is down 19%. The reasons are mainly because of the declining enthusiasm of the consumer market. In the meantime, we actively adjusted the market landscape of the market. Basketball lifestyle, the current market is impacted by the negative momentum of the market, down 9%. In the future, we will optimize the marketing and the product portfolio in this category and to make the best out of that and build up our strength from those weaker area.
In the meantime, we are active in making our position in the promising area. Through innovation and development, we are putting our presence in basketball and tennis, pickleball, and other emerging category of sports, and we found the really good momentums from those emerging areas. In 2025, our group continued to make more efforts in the running business, and we enhanced the portfolio of the running shoes and precisely matched the demands with different product offerings. For the whole year, professional running shoes sales volume was over 26 million pairs. Among those sales achievement, which is Ultralight, Chitu, and Feidian, was the key three major product categories and achieved 11 million pairs of sales. Technology development is the driver of our further development. At the end of last year, Ultralight was launched. That was equipped with the capsule technology.
It is the latest development of this category that enables the user to be agile and stable. Among the running business and the professional tournaments, we are making our presence there as well. We signed the contract with seven straight champions and our products were shown on the podium 145x . In 2019, we helped 27,277 champions and claimed their medals on the podium 522x . We worked together with the marathons at different cities like Wuxi, Hangzhou, Shenzhen. In Beijing, for those top runners who finished the game within one hour and a half, the proportion of Li-Ning shoes was definitely number one. In Shanghai, among the top three, the Li-Ning was also the most used brand.
Basketball is the area we continue the innovation, and we are working together with the top tournaments and the players to transform the enthusiasm to the consumption power and enhance the brand's influence. Within last year, we launched the brand new series of the products, that is Yu Shuai 20. This product is enabled by our technology platform, BOOM. The capacity and the functionality was enhanced, and Yang Hansen, who is now playing at NBA, is also using our products. We are crossing over with different brands and the players to promote our products at different occasions, including the street basketball. We are working with the NBA China and using the best chance in Macau, and we are working with Way of Wade and Jimmy Butler in San Francisco to launch the GB4 basketball shoes.
All of those market campaigns attract a lot of the attention from the basketball community. Training category is also enabled by technology, and we developed the aerospace level thermal technology platform. The winter training outfit is enhanced, the humidity and the thermal capsule capacity was enhanced. For the men's products, the core products makes the sales records over two million. For the women's products, we are focusing on the urban scenarios and through our cutting and the various style designs, we enhance the vitality of those women's sports player. 80% of our products in this category were sold out in the last year, and the business was enhanced because of those developments.
Casual and lifestyle business is positioned by striking the balance of functionality and aesthetic value, and we cross over with the classic culture and the Chinese culture. Together with the table tennis player Wang Chuqin, we make the latest products that is showing the Chinese culture and the aesthetic value, and also building up the confidence among the young people in China. We are making the Chinese-based Chinese festival and the Chinese cultural occasion to do our market campaigns and incorporate the Forbidden City and other traditional Chinese cultural elements into the design of the products. We continue to do R&D of our technology. Technology is the foundation, and the ultra-light style is the application scenario. We have four IP sets on our apparels. Wanlongjia is enabled by the storm proof, waterproof, and humidity management functionality.
It is a breakthrough of the function of this kind of the jackets that enable the user to use it in the very harsh conditions. Longkou series is designed by new functionality to make the demand for the windproof and rainproof. For the boots, we can use our boots at the different occasions like the hiking and the forest, so that we have something to offer for different function and the demands. Together with the Chinese Olympic Committee, we have the mission that is to build up the national pride through our brand's power. In 2025, in the October of last year, Chinese Olympic Committee, together with Li-Ning, we launched the 2026 Winter Olympics, the Chinese athletes official suits.
In February 2026, the Chinese athletes were wearing Li-Ning's products and the equipment showing our appearance and outfit at the opening ceremony of the Winter Olympics. It's showing the design and the technology from China. In 2025, the end of last year, we launched the Longstore and also the Rongyao products series, where we have the crossover with the National Olympic Committee with the brand of China, with Li-Ning. We can penetrate our brand awareness into the public and also meet the demands for the general public on daily uses. In 2026, earlier this year, we launched our products in Milan Fashion Show and launched our winter series of 2026.
The starting point was the historical legacy of the brands that we took, hindsight of the past, design, and we redeveloped the traditional designs of our brands and transformed the sports functionality to the fashion elements and when we launched the professional equipment for skiing. Looking forward to the future, Li Ning will continue to develop the Chinese sports development. Together with the Olympic Committee and the athletes of China, we will go together with them hand in hand and bringing the cutting-edge sports technology with the latest design from China. We are helping them, the Chinese athletes, to achieve the best out of their performance. I pass the floor to my colleague to give us the latest about the strategic development.
I'm Qian Wei. Good morning.
Now, I'd like to give you a review of the operation in 2025. In 2025, the foundation of the operation has been consolidated. As the partner of the Chinese Olympic Committee, we have the sponsorship and the franchising, also the marketing campaigns. The brand has been enhanced in the awareness. The revenue was up 3.2% to CNY 29.5 billion. The net profit margin is 9.9%. It's in line with the expectations. Within 2025, professional sports continue to contribute to the revenue. It's accounting 56% of the total. Professional running shoes technology is involved and more portfolio has been launched. The more resources has allocated, therefore, the revenue is up 10%. The total consumption amount is over CNY 26 million. Among that, the related key IP make the sales revenue 11 million pairs.
Traditional comprehensive training expanded the coverage to women and other professional users. We also give more applications in the men's business. Badminton is showing the great results. The racket sales volume was over 5.5 million. The badminton shoes portfolio is enhanced. The reputation is building up. The revenue is up over 30%. Because of the strong competition and the weaker demand, basketball and the casual sports business is under pressure. We on one hand are controlling the shipment amount of the basketball and making more efforts in marketing and the development of the sales. On the other hand, we will do the adjustment on the portfolio of the products to make our products more competitive. In the last eight years, efficiency of operation was rather stable and the sold-out rate for the new products was around 70%-80%.
Discount rates for the new arrivals was like 0.4 percentage points more. In the future, we will do more process management and have a better results in discount rate and the sold-out rate. The inventory sales ratio was around four months, and the self-owned inventory cost is up by single low digit, and the age of the inventory is rather healthy and in line with the expectation of the company. In the last eight years, our offline revenue was down by the low single digits, and the traffic is also down low single digits, and the conversion was down 1%. The per unit price was down by low single digits, and we are still facing challenges.
While on one hand, we are fine-tuning the efficiency of the stores, but we are opening up new stores, new projects to boost the confidence and the experience of the consumers, so we have better conversion rate. In 2026, we will be prudent to face the uncertain market conditions and make the best out of the current situation. We will be more comprehensive, more better prepared, and then we can deliver the targets. In 2025, we will continue to optimize the structure of the channels and also bring something new. We will close down the low performers and reform 479 stores. By the end of last year, the average store area was 240 sq m. The efficiency was RMB 1,220, RMB 284 million. We have 91% for the presence of the core business area.
That shows our competitiveness in the high-end market. We are also working with the top outlet groups, and we achieved the landscape and the planning of the outlets. We are also working with the Forbidden City to work together on the IP development, so the brand power will be enhanced. We will bring more new types of the stores, and we have the independent stores as the O2O store and the Dragon store. The image of the store will be leveled up as the largest store. We have 1,455. For the generation nine store, we have 834. In the future, we will continue to optimize the structure of the channels and continue to bring something new and to improve the efficiency of the stores.
E-commerce, as we all know that the e-commerce competition in 2025 was getting more fierce. We are setting up more channels and collaborating between online and offline. Overall speaking, the e-commerce performance was rather in line with the expectation. The traffic was growing up in the mid-single digit. On the efficiency of operation, we have the operation of the content and all channel O2O conversion and association rate. The traffic is up 2%. The business conversion rate was stable and discount rate was added 1 percentage point. The key IP sales and the incubation of new IPs are both ongoing. In 2025, Ultralight 2025 basketball shoes, Del One and Liren, and the running shoes, those new IPs are definitely the hit and the popular products.
For those key IP and SMU, they are in the pipeline of our development, and we will continue to bring more depth to the key IP sales volume. The online, offline will have the synergy, and the efficiency of the inventory will also be improved. Therefore, the inventory level will be maintained for the inventory. For kids business, we will continue to improve our efficiency and bring better structure of the products. The shoes is taking 47%, 2.5 percentage more. The overall performance has been enhanced through the operational enhancement and the quality of the management. We are making the presence in the key market, emerging markets and the strategic outlets. The offline sales traffic is up 10%-20%. Discount rate is up 0.8 percentage points. The per unit price was growing up by low single digits.
This is my review of the operation in 2025. Looking forward in 2026, we will continue to get the bottom right and bring more market shares to our company. We will continue to work on the professional and the innovative business category and the products, and to bring our endeavors to the new channels and the new scenarios, then we can make the company's development healthy and continuous and even sustainable. Thank you very much.