Topsports Announces Annual Results for FY2024/25: Rising to Challenges, Strengthening Foundations for Progress, Aligning with User Needs in Harmony, and Upgrading Omni-channel Retail through Iteration

(22 May 2025 - Hong Kong) Topsports International Holdings Limited (“Topsports” or “we” or the “Company”; Stock Code: 6110) is pleased to announce the audited consolidated results of the Company and its subsidiaries (together, the “Group”) for the year ended February 28, 2025 (the “Reporting Period”).

Amidst a complex and challenging external landscape and a sluggish global economic recovery, the Chinese economy has steadfastly pursued progress while maintaining stability, driving moderate growth in overall consumption. The consumption landscape is undergoing subtle yet significant shifts, marked by emerging key trends such as  "rational decision-making," "the rise of self-fulfilment-driven experiences," "increasing polarization of demand," and "strong commitment to sustainability". As both a seasoned observer and an active participant in the industry for the past 25 years, the Group has tracked the evolution of the global macroeconomic landscape, cyclical fluctuations in domestic consumer demand, and the changing competitive dynamics of the sector. Over the past year, these factors have converged to create increasingly complex and recurring patterns, exerting pressure on the Group's overall financial performance. Change has become the new normal, and the Group remains focused on "adapting to change" and "pursuing certainty" in its business operations and development. We maintain close collaboration with our partners, remain attuned to consumer needs, and foster symbiotic growth with our employees, all while delivering robust and sustainable value to our shareholders. Our commitment remains to "become the one-stop omni-channel operations provider for diverse brand partners in China across diverse categories".

Maintaining Steady Cash Generation and Upholding Shareholder Value Creation Amid Market Volatility

Affected by weakening consumer demand and declining footfall of offline stores, the Group’s revenue declined by 6.6% year-on-year to RMB 27,012.9 million. To address inventory pressures stemming from sales declines, the Group collaborated with brand partners to counter these challenges, including accelerating the integration and turnover of Omni-channel inventory, ramping up overall promotional activities, making tactical optimization of online-offline sales mix. Notably, the pace and scale of these adjustments were amplified in the second half of the financial year. As a result of the above factors, the Group's gross profit margin declined by 3.4 percentage points year-on-year to 38.4%, while profit attributable to equity holders of the Company decreased by 41.9% year-on-year to RMB 1,286.0 million. The profit margin attributable to equity holders of the Company decreased by 2.8 percentage points year-on-year to 4.8%. By the end of this financial year, the inventory control has yielded tangible results. As of February 28, 2025, inventory value decreased by 4.5% compared to February 29, 2024, and by 1.9% compared to August 31, 2024. The total inventory has been effectively controlled, with inventory turnover days showing improvement both year-on-year and half -on-half.

Despite challenging market conditions, the Group maintained robust cash generation capabilities throughout this period of volatility. As of February 28, 2025, the cash and cash equivalents reached RMB 2,587.4 million, up 32.3% year-on-year. The net cash generated from operating activities increased 20.0% to RMB 3,755.3 million. Accordingly, the Board has recommended a final dividend of RMB2.00 cents per ordinary share and a special dividend of RMB12.00 cents per ordinary share for the financial year ended 28 February 2025, which, together with the interim dividend of RMB14.00 cents per ordinary share, amounts to a total dividend of RMB28.00 cents per ordinary share for the financial year ended 28 February 2025, representing a payout ratio of 135.0%. Since the listing in 2019, the Group has distributed cumulative dividends of RMB 12.96 billion, with an aggregate payout ratio of 104.2%. In a volatile market environment, the Group maintain a dividend payout ratio that outpaces the industry average, this achievement serves as a powerful testament to the Group’s resolute dedication to generating robust, sustainable cash flows and the proactive strategy of delivering long-term value to shareholders.

Co-Evolving with the Industry and Upgrading Our Omni-channel Retail Platform

As retail consumption patterns evolve, the roles of offline and online channels are increasingly interconnected, fostering a dynamic new ecosystem. This year, the Group drew insights from consumers and identified subtle trends hidden within the surging market waves.  Our omni-channel strategy adheres to the principle of "efficiency first, ecosystem synergy", maintaining a consumer-centric approach while continuously refining a systematic omni-channel framework that connects products and services with users efficiently. As an industry nexus, Topsports has delivered more consistent and diversified consumer experiences. Offline stores prioritize lean operations, maximizing immersive experiences through compact premium spaces and elevated service. Online channels leverage diversified platforms to precisely capture user demand while extending offline reach via innovative "one store in multiple platforms" models. By eleminating online-offline omni-channel inventory barriers, Topsports established a "fast lane" for product circulation. Strategic optimization of online stock availability and accelerated clearance further improved capital turnover efficiency.

In formulating its offline store layout strategy, the Group has followed the principle of “Select + Optimize” with efficiency as the central focus. Topsports adjusted under the philosophy of “Each Brand with a Unique Approach” to the retail store mix, taking into account the distinct brand characteristics of its partners, consumer profiles, and product attributes. On one hand, we have managed store expansion and renovation prudently to address offline market pressures, while accelerating the phase-out of underperforming stores. As a result, as of 28 February, 2025, the Group operated 5,020 directly-operated stores, representing a year-on-year decrease of 18.3% in total store count and a 12.4% reduction in the gross selling area. On the other hand, in light of the comprehensive store network restructuring and role transformation, Topsports deeply recognises the fundamental role physical stores play in the sports industry. The Group had strategically upgraded stores with potential value, using the dual consumer needs of "functionality + socialization" as the guiding principle for precise store space planning, to seek optimal balance between experiential value delivery and store performance. During the financial year, Topsports collaborated with brand partners to pioneer next-generation store concepts, transforming stores into vibrant hubs where urban culture meets sports lifestyle.

In online business development, Topsports fortified its "platform e-commerce, content e-commerce, and private domain operations" matrix. This growth has provided crucial tactical support in alleviating inventory pressures and offsetting fluctuations in offline foot traffic. Looking ahead, the Group is realigning its digital ecosystem, tailoring strategies to the unique characteristics of each online channel and its consumer attributes. By the end of the period, the Group’s Douyin and WeChat video accounts had exceeded 500, and the mini-program stores had surpassed 2,300. During the period, Douyin’s sales performance ranked No.1 in the platform's sports and outdoor category. Moreover, the Group maintained seamless connections with users through over 100,000 WeCom groups, and the private domain mini-program consistently maintained the No.1 placement in WeChat mini-program’s sports-and-outdoor category ranking published by Tencent. This financial year, online retail sales, including public domain and private domain, experienced double-digit growth compared to the previous year and accounted for mid-30% of total retail sales.

Throughout the financial year, technological advancements and the widespread adoption of artificial intelligence (AI) have injected new momentum into the retail operations. Topsports’ digital transformation strategy centers on the core principles of "precision + efficiency", encompassing the entire retail ecosystem of "people + products + places". The Group is advancing toward a vision of "seamless user connectivity, operational agility, and cross-occasional integration". 

On the user engagement front, the Group implemented cross-platform member data integration, resulting in a nearly nine-fold year-over-year increase, substantially scaling the user base. On the product front, the AI-powered recommendation engine generated approximately four times the GMV compared to previous conventional methods. Regarding the distribution channels, the upgraded mini-program resulted in a 17% year-over-year improvement in conversion rates and a 20% year-over-year increase in average session duration. The Group has also intensified its efforts to harness AI across the retail ecosystem. The proprietary "Dolphin AI" platform has been partially integrated with the company's full-scenario workflow, enhancing the efficiency of core operational applications, optimizing resource allocation, and injecting more valuable potential into business segments.

In Sync with Users through Operational Excellence and Enhanced Value

Evolving external conditions and fluctuations in consumer demands continue to heighten the challenge for businesses to gain precise user insights and strengthen user loyalty. In the face of traffic plateaus and rising user acquisition costs, Topsports has chosen to adopt a consumer-centric perspective, building a diversified user value system that taps into consumers’ potential value and forming a healthy ecosystem with strengthening the bond and fostering deeper connections with users.

On the user acquisition front, Topsports diversified user acquisition methods to attain new user groups through contextualized marketing, engaging experiences, and cross-industry collaborations across all channels. During the period, the Topsports user base reached nearly 86 million users. As Topsports achieves breakthrough presence in more scenarios and platforms with integrated user data across multiple platforms, enabling users to enjoy more consistent rights and experiences across all Topsports’ Omni-channel ecosystems.

While continuing to expand the user base, Topsports recognizes that deepening engagement with existing users’ needs is vital in today's existing market competition. To this end, The Group have implemented sophisticated user segmentation and behavioral analysis to deliver personalized product recommendations and targeted marketing initiatives. Beyond the established calendar of regular member events, such as the May Day card collection, 99 Member Month, Chinese New Year Shopping Festival, and themed events in popular tourist destinations, Topsports launched collaborative collections with beloved characters like "DUCKYO FRIENDS" and "Teletubbies". The brand identity continues to evolve through proprietary initiatives such as the "TOP Run Free" running platform, the "Ignite Your Sports Life" community program, and the "GREENBOX" sustainability project, engaging younger consumers that expand the "sports+" lifestyle concept and strengthen brand affinity. As a result of these initiatives, members accounted for 93.2% of total in-store retail sales (including VAT). Repeat-purchase members contributed approximately 70% to overall member consumption, maintaining a substantial and stable contribution. The Group's focus on cultivating loyalty among high-value members continues to yield positive results. While these premium users represent only a mid-single-digit percentage of the active membership base, they contributed nearly 40% of total member sales. Their average transaction value consistently exceeds the membership average significantly, demonstrating substantially higher spending potential and retention compared to general members.

Innovating to Connect Group with Consumers across Multiple Dimensions

In response to the prevailing macroeconomic climate and global uncertainties, Chinese consumers have adopted a more prudent consumption approach, with consumption potential remaining partially constrained in the near term. Nevertheless, the increasing segmentation within the sports retail market has created opportunities in specialized categories, as Generation Z and the emerging middle class—the driving forces of sports consumption—increasingly align their purchasing decisions with personal identity and self-fulfillment. Throughout this period, the Group continued to leverage the diverse category portfolio, further enriching its brand partnership matrix across four key segments, including recreational sports, leisure sports, performance sports, and IP culture. During the reporting period, Topsports further expanded its "circle of partners" by onboarding globally renowned running and outdoor brands as their exclusive partner in the Chinese market. This strategic expansion provides Chinese consumers with more diversified choices while fueling innovation within China's sports market. By fiscal year end, the Group has established deep collaborations with over 20 brands to jointly explore new industry opportunities.

Topsports strengthened its collaboration with nordaTM, a Canadian high-end trail running brand during the period, establishing an online presence on Tmall's flagship store and rednote while entering sports fashion boutiques in multiple cities, such as Shanghai and Beijing, to fully capture the development opportunities in trail running within the outdoor segment. The Group recently secured an exclusive partnership with SOAR Running, a premium performance brand, to lead its development in China. In the coming months, the brand will connect with Chinese consumers via online flagship stores and various offline formats. 

In the outdoor segment, Topsports recently entered into a partnership with Norrøna, a top-tier professional outdoor brand. As its exclusive operating partner in China, Topsports oversees end-to-end operations—including brand promotion, marketing, channel establishment, and consumer engagement—to jointly unlock the outdoor market’s potential with the brand. The Group's online strategy deploys flagship e-commerce stores and private domain channels, while offline initiatives integrate sporting events and community-driven activations to connect with core user groups. Guided by an "Omni-channel operation + precise engagement" approach, Topsports forges meaningful brand-consumer linkages. 

This financial year marked a transformative leap in Topsports' sustainability journey. By anchoring consumer rights at the heart of its value proposition, the Group strengthened product quality and safety protocols while enhancing consumer experiences through thoughtful services and digital empowerment. In green ecosystem development, brand partnerships yielded significant results—a newly launched eco-concept store received Leadership in Energy and Environmental Design (LEED) Gold certification, showcasing environmental stewardship in sustainable construction materials, energy-efficient systems, and low-carbon building processes. These spaces now provide consumers with retail environments that harmonize quality and ecological responsibility. Through its signature "GREENBOX" initiative, Topsports has deepened its advocacy for circular economy principles, aligning consumer engagement with sustainable practices. This commitment has garnered international recognition, as reflected in the Group’s MSCI ESG rating, which has achieved a two-level improvement to AA, reinforcing its leadership position in China’s consumer goods sector.

Committed to providing the one-stop Omni-operation solution for more partners in China under a variety of sports formats, the Group delivers diversified products and immersive experiences to mainstream and niche audiences alike, injecting fresh vitality into the market.

Future Outlook

As China has designated consumer spending as a key economic priority for 2025, the introduction of policies supporting sports consumption is expected to inject fresh momentum into the sporting goods retail sector. Meanwhile, the sporting goods market continues to evolve rapidly with emerging scenarios, brands, and product categories, intensifying competitive pressures across the industry. Nevertheless, Topsports remains clear-eyed about these challenges while confident in its capabilities. Amid these opportunities and challenges, Topsports will continue to refine the retail expertise. With forward-looking and agile strategic execution, the Group is dedicated to creating enduring value for consumers, shareholders, partners and society.

Under the volatile market environment, the management emphasises that Topsports has remained steadfast in its commitment to pursuing long-term value by embracing difficult yet essential initiatives. Looking ahead to the coming year, the Group will focus on deepening omni-channel retail and user value creation and lay out long-term growth through continuous business and service innovation. The Group will consolidate and enhance operational efficiency and forge operational resilience with “precise + efficient” digital empowerment. Meanwhile, the Group will actively practice ESG concepts to build a sustainable path encompassing collaboration and shared value.

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About Topsports International Holdings Limited

Topsports is a leading sportswear retail operator in China. It has an extensive and deep retail network across the country and an Omni-channel interconnected layout of online and offline touchpoints, with in-depth cooperation with more than 20 well-known sports brands. Topsports is committed to providing consumers with first-class sports goods and services, and creating a never-ending, active, healthy and happy sports and life experiences.