Topsports International Holdings Limited

In H1, revenue declined 5.8% to RMB 12.3 billion. Retail revenue fell 3% year over year, wholesale revenue fell 20.3%, core brand sales declined 4.8% to RMB 10.8 billion, and other brand sales declined 12.2% to RMB 1.4 billion. Gross margin was 41%, down 0.1 percentage point, while total expenses fell 5.5% and the expense ratio rose 0.1 point to 33.2%. Excluding other income, net profit declined 6% year over year, and net profit margin was 6.4%, down 0.3 point. Net operating cash flow was RMB 1.35 billion, free cash flow was RMB 1.22 billion, dividend payments were RMB 868 million, period-end cash was RMB 2.538 billion, and net cash was RMB 1.27 billion. At end-August, Topsports operated 4,688 directly operated stores, with store count down 19.4% and sales area down 14.1%. For fiscal 2026, management said it still expects net profit to be flat year over year and net profit margin to improve year over year; it also said it is too early to provide fiscal 2027 guidance.

Wu Yu framed the quarter as a period of stabilization in a still-challenging market, saying value is increasingly important to consumers and that new consumption scenarios are reshaping demand. He emphasized that Topsports is sticking to its core strategy while adapting quickly through broader brand partnerships, omnichannel execution, and more refined operational efficiency. His tone was cautious but confident, repeatedly stressing resilience, patience, and a long-term approach to building the company’s role in the sports retail ecosystem.

Rebecca Zhang said H1 results were in line with plan and above market expectations, despite softer demand. She highlighted the key margin drivers: deeper discounts and a shift toward online sales pressured gross margin, but retail mix and brand partner support helped hold gross margin decline to just 0.1 point at 41%. She also pointed to cost control, including rental expenses down 12.1%, employee headcount down 16%, employee costs down 5.2%, and a 36% drop in capex; liquidity remained strong with RMB 1.35 billion in operating cash flow, RMB 1.22 billion in free cash flow, RMB 2.538 billion of cash, and RMB 1.27 billion of net cash.

Analysts focused on Nike’s China strategy, the sustainability of brand support, the company’s brand expansion strategy, the weakness in offline traffic, and the contribution of new brands. Management said it is working with Nike on store and product planning, including lower store build-out costs and more selective openings, and noted that Nike’s discounting in China has been getting more controlled. On brand support, management said it should remain meaningful because Topsports is a large, long-term partner, though support varies by brand and period. On new brands and Ektos, management said niche brands currently contribute little to profit, but they are strategic pilots for future growth; Ektos was described as evolving beyond a store into a social and community hub for runners.