China's sports apparel market has been struggling as a result of inventory mismanagement and excessive expansion after the 2008 Beijing Olympics.

According to Bloomberg, the nation's six biggest sportswear companies opened a combined 12,300 stores between 2008 and 2011, an average of 11 per day, expecting higher demand after the Olympics. But the industry found that demand didn't keep pace with its growth.

Last week, ANTA Sports Products Ltd said first-half profit sank 18.7 percent and cash flow contracted by 34.6 percent.

Kim said although Li Ning's inventory position has improved, the industry's inventory level is still high on average, and more time is needed to resolve the problem.

Li Ning's first-half loss of 184 million yuan was less than expected. Three analysts surveyed by Thomson Reuters had forecast a 241 million yuan loss.

Excluding one-time spending on the makeover, the company reported earnings of 58 million yuan before interest, tax and amortization expenses.

The total number of stores was 6,024 as of June 30, compared with 8,255 at the end of 2011. Inventory levels dropped about 30 percent year-on-year.

The inventory turnover ratio fell to less than seven months from nine months at the end of 2011.

Same-store sales at its direct-sale stores grew 9 percent in the first half.

The partnership with National Basketball Association star Dwayne Wade has boosted brand recognition and product sales, the company said.

Wade-branded shoes will hit the United States market over the next few months. Li Ning also stepped up digital marketing this year to appeal to younger people.