Faced with an economy under pressure and lower consumer spending and traffic due to high youth unemployment, Greater China’s largest retailer of Nike and Adidas reported lower sales, profits and gross margin for the six months ended Aug. 31.
Total Topsport revenues fell by 8 percent to 13,054.7 million yuan (€1.7b) from 14,176.5 million. Year-over-year net income contracted by 35 percent to RMB 873.8 million (€113.5m) from RMB 1,337.2 million. Retail sales fell by 9 percent to RMB 10,924.7 million (€1.42b) as wholesale revenues declined by 2 percent to RMB 2,035.4 million (€264.3m). Discounting, inventory impairment charges and a wholesale mix shift toward lower-profit products combined to push gross margin down by 370 basis points to 41.1 percent. Inventory at period end was up 6 percent year-over-year at RMB 6,119.9 million (€794.6m).
Combined Nike and Adidas sales for the six months decreased by 8.1 percent to RMB 11,351.3 million (€1.47b) from RMB 12,346.8 million. H1 revenues from the other brands sold by Topsport, Puma, Converse, Skechers, The North Face, and Timberland among them, decreased by 6.5 percent in local currency to RMB 1,608.8 million (€208.9m).
The Chinese group, which has cut its store count by 27 percent since February, ended H1 with 5,813 doors versus 6,209 a year ago.
