Li Ning Co, China's largest sportswear company by sales revenue, posted its first annual loss after sales fell for a second year amid fierce competition and flat economic conditions.

Its net loss of 1.98 billion yuan (US$314 million) last year was bigger than its previous forecast of a 1.4 billion-yuan full-year loss after sales plunged 24.5 percent to 6.74 billion yuan, the company said in a Hong Kong stock exchange filing yesterday.

Its shares dropped 2.58 percent to HK$4.53 (58 US cents) yesterday.

"Market and industry conditions continue to be difficult and the company's financial performance will remain challenging at least in the first half of 2013," founder and chairman Li Ning said in the filing.

The company has been trying to clear inventory and streamline outlets by closing 1,821 inefficient stores in the past year.

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