Topsports International Holdings Limited

News Detail

Press Release News vom 31.05.2022

Swiftly Navigate Market Dynamics and Steadily Execute the Long-term Strategy：Topsports Announces Annual Results for the Fiscal Year Ended 28 February 2022

(31 May 2022 - Hong Kong) Topsports International Holdings Limited (“Topsports” or the “Company”; Stock Code: 6110.HK) announced its annual results for the fiscal year ended 28 February 2022 (the "Period").

Over the past year, retail environment became more volatile as impacted by diverse challenges including resurgent pandemic outbreaks, which has been a profound test of companies’ ability to navigate and embrace dynamics. As a retail company, Topsports endeavored to nimbly address the market equilibrium despite uncertain external conditions through omni-operation agility to integrate online and offline, while fully unlocking market potentials by discerning the ever-changing consumer needs. The Company enriched its brand portfolio and partnered with 11 leading international and domestic sportswear brands. Meanwhile, leveraging its well-established omnipresent marketplace, Topsports further accelerated its efficient inventory turnover as underpinned by its O2O model, with over 80% of directly-operated stores equipped with O2O connections, and retail sales contributed by its O2O business soared by 30% year-on-year. In particular, the Company successfully maintained its operation efficiency, including healthy sales contribution mix and inventory mix, as well as steady average working capital to sales ratio amid external variations, resulting in strong cash generation, together with enhanced shareholder returns. The Company’s business moat is further enhanced as it constantly upgrades its “Retail Operation Playbook” against the ever-changing market environment.

During the Period, the Company's revenue was adversely impacted by the macro environment and decreased by 11.5% year-on-year to RMB 31,876.5 million. Balanced by efficient inventory turnover and disciplined markdown control, gross profit margin recorded a year-on-year increase of 2.6 percentage points to 43.4%. Despite of efficient cost control, the profit attributable to the Company’s equity holders decreased by 11.7% year-on-year to RMB 2,446.5 million due to revenue decline. Basic earnings per share was RMB 39.45 cents, representing a decrease of 11.7% year-on-year. The Board has proposed a final dividend of RMB 7.00 cents per ordinary share and special dividend of RMB 23.00 cents per ordinary share for the fiscal year ended 28 February 2022. Together with the interim dividend of RMB 13.00 cents per ordinary share, the total dividend for the fiscal year ended 28 February 2022 amount to RMB 43.00 cents per ordinary share (2021: RMB64.00 cents per ordinary share).

Cultivate the Omni-operation Agility to Discern Consumer Needs

In light of the ever-changing consumer demand and the need for better consumption experience, more immersive shopping experience has gradually overtaken product display as the focus. The optimization of directly-operated retail network with strategy of “Select + Optimize” remained as the core focus.

Brick-and-mortar stores transformed themselves from retail outlets to experience hubs that offer one-stop service as interconnection of the online and offline journey. Meanwhile, they also served as the traffic intersection point between online and offline to further facilitate the evolution of store-based Omni-operation capabilities. Topsports consistently upgraded and renovated high potential stores in joint efforts with its strategic brand partners in major commercial areas with higher potentials. As of 28 February 2022, Topsports operated a network of 7,695 directly-operated stores, with a net decrease of 311 stores and an increase of 5.4% in gross selling area year-on-year. Among them, large format stores over 300 sqm accounted for 12.9 %, representing an increase by 3.5 percentage points from 28 February 2021. Meanwhile, traditional store functions were reconstructed through Omni-operation which blur the lines between online and offline. According to the Company, for stores equipped with WeChat mini programs, sales from private domain contributed to mid-teens of the total direct retail sales (before VAT) of these stores during the fiscal year.

Operation Empowered by Digitalization with “Precision + Efficiency” to Recalibrate the Trinity of People, Product and Marketplace

With the accelerating digitalization of retail consumption, digitalization remains as an enduring battle for Topsports for the future. During the Period, Topsports continued to invest to strengthen its digitalization capability, while growing its professional talent team and carrying out efficient product development and iteration to cope with operation needs. On top of existing digitalization progress, Topsports continued to push forward development of middle-platform data system to provide intelligent support capability, with a long-term commitment to empower front-line retail operations, more specifically the trinity of “people”, “product” and “marketplace”.

During the Period, to empower its private domain operation, which is growing in sophistication, Topsports launched an integrated multi-purpose platform including consumer data dashboard. The new system enables consumer analysis across brands, serving as a useful guidance for front-line consumer engagement and back-office procurement systems with advanced accuracy and precision. The immense data processing capability of the new system also provided the Company with the ability to target and activate members through automatic marketing activities at scale by leveraging granular user labels. Simultaneously, Topsports piloted private domain operations in certain regions. Through a centralized, standardized and uniform management for certain operating functions supported by digital measures, Topsports further enabled the front-line staff to focus more on consumer growth at scale. At present, this project has obtained initial encouraging results.

At “product” and “marketplace” level, Topsports endeavored to enhance analysis and management both in terms of latitude and granularity through more detailed tagging in marketplace and merchandise, based on input from a combination of internal and acquired data. Through this, the Company aim to enhance the precision of its future marketplace placement as well as optimization of retail operation by leveraging on power of algorithm generated from multiple data and analytical models.

Obsessed with Consumer Operations for Double Increase of User Scale and Loyalty

Topsports remained steadfast in its efforts to seamlessly connect with consumers. The Company strengthened consumer awareness and recognition of Topsports by virtue of omnipresent consumer engagement, community interaction, and actions to discern consumer needs, echoing their lifestyle and social passions. During the Period, Topsports launched a series of member activities to help boost member loyalty and recognition.

As of February 28, 2022, both the cumulative number of enrolled members and WeChat followers recorded year-on-year increase. The cumulative number of enrolled members reached 55.5 million, an increase of 35% year-on-year, and the cumulative number of WeChat followers approached 7 million, doubling year-on-year. During the latest quarter ended February 28, 2022, the total in-store retail sales (including VAT) contributed by members maintained at a high level of 96.4%, with contribution of over 70% from existing members.

Expand Engagements with Enriched Services along the Consumer Journey to Fortify Business “Moat”

To extend the connection and companionship with consumers and encompass each segment along consumers journey, Topsports seeks to extend its service and content offerings from the traditional transaction and post-sale, to gradually extend to engagement and interaction during pre-sale to increase customer lifetime value, and further fortify its business "moat" for healthy and sustainable future.

During the Period, Topsports accelerated exploration in “product recommendation + traffic conversion” among multiple platforms to gradually establish content media matrix to incubate self-owned IP accounts. The Company’s official WeChat accounts have more than 27 million followers, with nearly 70 million views in total for content published across all social media accounts last year. In addition, TOP E-sports club has continuously succeeded in various competitions, including the Demaria Cup champion in the League of Legends Pro League in December 2021, which attracted a soaring traffic inflow of followers of Topsports E-sports Weibo account to over 5.6 million, paving the way for commercialization.

OUTLOOK

The management of Topsports stated, as a participant, contributor and witness of the development of the sports industry in China, Topsports is dedicated to its mission of “breaking boundaries through sports and inspiring limitless possibilities” in the future. Consumer-centric at the core, also as together with its brand partners, Topsports is committed to steadily implement strategies including recalibration of business model for traditional stores to equipped with Omni-operation Capabilities, deepen long-term digitalization with “Precision + Efficiency” strategy, focus on the dual-expansion of membership scale and enhanced loyalty by doubling down on consumer engagement and traffic operations, and extend service offerings along segments of consumer journey to fully unlock of consumer lifetime value. In joint efforts with its brand partners, Topsports is also endeavored to achieving quality and sustainable development with the sport spirit to better serve Chinese consumers, and continually creating long-term value for its consumers, shareholders and all partners sustainably.

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About Topsports International Holdings Limited

Topsports is a leading sports retailer and operator in China with an extensive and deeply penetrating retail network covering nearly 8,000 directly-operated stores in more than 300 cities across the country with in-depth partnerships with 11 leading sports brands. Topsports aim to foster the boundless, healthy and joyous experiences inspired by sports to consumers through superior products and services offerings.

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