LI Ning Co, China's largest sportswear company in terms of sales income, has posted its first annual loss, after recording a sales decline for the second year.

The net loss was 1.98 billion yuan (US$318,548,184) last year - larger than its previous predict of 1.4 billion yuan.

Sales were down 24.5 percent to 6.74 billion yuan, the company said in a stock exchange filing today.

It added that market and industry conditions continue to be difficult and Li Ning's financial performance will remain challenging, at least in the first half of 2013.

Li Ning has been stepping up efforts to clear its inventory and streamline outlets, closing 1,821 inefficient stores and optimizing its sales network in the past year.

It said it will continue to integrate and optimize regional sales channels to achieve strategic transformation.