Leading domestic sports brand Li Ning Co announced Monday a 1.4 to 1.8 billion yuan ($224-$288 million) plan to aid its distribution channels, aiming to accelerate the company's inventory clearance and enhance sales channel profitability.

Li Ning Co will buy back old inventory from its distributors and replace it with new products, the company said in a filing on the Hong Kong Stock Exchange Monday.

The company said it will also help to improve the financial status and cash flow of its distributors by "restructuring the accounts receivable from individual participants."

"It is necessary to offer such help to distributors amid the industry downturn, as too much inventory will inhibit distributors' plans to purchase new products," Zhang Qing, CEO of Beijing Key Solution Sports Consulting Co, told the Global Times.

Zhang noted that the move could also help to boost distributors' confidence in the future growth of the sporting goods sector.

Major sports brands such as Nike and adidas, as well as some Chinese companies, have reported slower growth amid this year's global economic downturn. Nike reported a 12 percent drop in net profit in the quarter ended September, and it cited fewer orders from China as one of the reasons behind the slowdown.

Peak Sport, another Hong Kong-listed mainland sports company, saw its net profit drop 43.3 percent in the first half of this year. In the first three quarters, the company has closed 1,067 stores in China to the current 6,739 stores.

Li Ning's net profit also dropped 85 percent in the first half. And the company said in the Monday statement that Li Ning is expected to have a "rather substantial decline" in profit for the year overall.

Domestic sports brands are facing increasing competition from international brands such as Nike and adidas as the latter are also eyeing a share of the middle and low-end market, said Wang Zhuo, secretary-general of the China National Garment Association.

"Domestic sports companies should take the current downturn as an opportunity to reposition themselves," Wang told the Global Times Monday.

Wang noted that as the Chinese economy gradually bottoms out, the garment industry may also improve next year.

Li Ning's shares dropped 3.89 percent Monday after the company released the warning on its net profit this year, compared with an overall 0.41 percent drop in the Hong Kong bourse.