CEO of Domestic Sports Brand Li Ning Purchases British Shoe Brand Clarks

Big news in the Chinese fashion industry last week is that a Hong Kong seasoned private equity firm LionRock Capital acquired a majority stake in Clarks, the 195-year-old world-renowned shoe brand. The CEO of LionRock is Li Ning (李宁), former Olympian and the CEO of famous Chinese sports apparel and equipment brand Li Ning. The transaction should be finalized by the end of 2020.

Clarks was founded by Cyrus Clark and James Clark in 1825. It is one of the most representative shoe brands in UK. When the brand was at its peak, it sold 54 million pairs of shoes a year, with the sales amount reaching 1.5 billion pounds.

However, the brand failed to tailor its products based on young consumers’ tastes and because of its conservative marketing strategy, Clarks could not make ends meet even before the COVID pandemic. In 2019, the brand’s deficit reached 75.7 million pounds and after it laid off 900 employees, Clarks announced to the world that it has filed voluntary petitions for bankruptcy and it was applying for stopping paying rents of 60 stores.

Is This a Good Move by Li Ning

Is it a risky decision for Li Ning? Not exactly. Clarks has 1,400 offline stores globally and over 400 of them are located in China. It is a well-known brand among Chinese consumers. He will not have to introduce the brand to the market, just reinvigorate it with updated marketing tactics.

And Li Ning is the perfect person to do this and the Li Ning brand just recovered from a similar financial crisis not long ago and is now one of the most trendy and popular brands among young Chinese consumers. Li Ning was 3 billion RMB in debt, and Li Ning used one year to get itself out from the gulf, and at the same time the brand has successfully brought the Guochao (the rise of domestic brands) trend to the spotlight in its viral New York Fashion Week debut in 2018.

With this experience still fresh in his mind, it is not very likely that Li Ning will put his business in danger again by taking on an acquisition he can’t handle.

In fact, the acquisition is a smart move for Li Ning, especially to do it under LionRock Capital. If he finalizes the acquisition through his eponymous company Li Ning, if something goes wrong with Clarks, it will affect the brand Li Ning simultaneously and that’s why the company is trying to excuse itself from this acquisition. The less connection with the brand Li Ning, the better.

The acquisition is also understood as Li Ning is exploring a new way to grow while also avoiding conflict with Anta, another top domestic sports brand. Li Ning’s fashion empire is expanding from sports and athleisure to multiple categories, and its ambition also lies on the international market.

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