Topsports International Holdings, the leading Chinese sports distributor and retailer spun off by Belle International in 2019, reported a decline of 1.2 percent in total revenues to 15.57 billion renmimbi (€2,128m-$2,407m) for the first half of its financial year, ended Aug. 31. The gross margin improved by 2.9 percentage points to 44.5 percent, thanks to lower discounts and more integrated cooperation with its 11 strategic brand partners. The operating margin rose by 1.1 percentage points to 13.2 percent and net earnings increased by 9.3 percent to RMB 1,430.8 million (€195.5m-$221.2m).
With a drop in sales of just over 2 percent, Nike and Adidas represented 86.8 percent of total revenues. Sales were up by 8 percent for other brands including Puma, Converse, Vans, Timberland and The North Face. Topsports did not mention the consumer backlash against western brands that began in March over sourcing products from the Xinjiang region. It said that consumer awareness combined with government restrictions significantly affected store traffic. Volatile market and supply chain conditions resulting from the Delta variant of Covid in July and August also contributed to the overall sales decline.
Falling slightly, retail operations contributed 81.6 percent of the total turnover, down from 82.5 percent in the year-earlier period, while the wholesale segment expanded by 4 percent to represent 17.4 percent of total revenues.
Topsports has been opening larger stores and closing smaller units, ending up with a 4.9 percent increase in the gross selling area year-on-year; while the number of directly operated doors dropped by 371 to 7,785. They are located in more than 360 cities.
A total of 47.2 million members were enrolled in its loyalty program by the end of August, 43 percent more than a year earlier, including 5.1 million “friends” on WeChat. About 30 percent of the active members purchased products by two brands or more.
