Topsports International's performance has declined significantly, and its physical stores are in crisis

Against the backdrop of China's economic growth slowdown, Topsports International, the country's largest sports goods retailer, faces severe challenges. The company's latest financial data shows that in the six months ending August 31, 2024, Topsports achieved revenue of 13.055 billion yuan, a year-on-year decrease of 7.9%; net profit was 874 million yuan, a year-on-year decrease of 34.65%. The number of directly-operated stores decreased by 331, indicating that Topsports is undergoing a difficult adjustment of its offline business.

Topsports International is known for its multi-brand strategy, and its stores represent many international sports brands, including Nike, Adidas, PUMA, Skechers, Vans, etc. As the main partner of these brands in China, Topsports' operating conditions not only reflect its own strategic changes, but also reveal the market environment pressure faced by international brands in China.

Changes in consumer habits: online consumption rises, offline customer traffic is sluggish

Topsports' performance report points out that the sluggish offline store traffic and changes in consumer shopping behavior are important factors affecting the company's performance. With the rapid development of e-commerce, more and more consumers choose to shop online and pursue cost-effective products, especially price and psychological acceptance become key considerations for decision-making. This trend has increased the difficulty of offline retailers to acquire customers. Since the epidemic, changes in consumer behavior have become more obvious, and offline stores have gradually decreased. Therefore, Topbo International has actively promoted online layout to cope with increasingly fierce market competition.

The number of offline stores continues to decrease: Topbo's strategic adjustment

After the epidemic, Topbo International adopted a strategy of reducing offline stores. According to data from Topbo International, from fiscal years 2021 to 2024, the number of Topbo's stores will decrease from 7,695 to 5,813, with an average annual closure of more than 600 stores. This trend reflects Topbo's adjustment of the consumption environment in the Chinese market. In the context of a sluggish offline operating environment, Topbo is shifting resources to online channels and new retail fields with greater growth potential to maintain its competitive advantage in the digital age.

International brands suffer setbacks in the Chinese market: a double blow from boycotts and economic contraction

In recent years, as trade relations between China and Western countries have become tense, many international brands represented by Topbo have also been hit. Since 2021, some European and American countries have questioned China's human rights issues in Xinjiang, triggering a wave of boycotts by Chinese consumers against related brands. Brands such as Nike, Adidas, and PUMA that have issued statements of "refusing to use Xinjiang cotton" have become the focus of boycotts. As the main partner of these brands, Topsports is under the dual pressure of consumer sentiment fluctuations and declining brand influence.

Not only Topsports International, but also Nike and other companies' performance in China has been impacted by the boycott. According to Nike's latest financial report for fiscal year 2025, its revenue in Greater China fell 4% year-on-year to US$1.666 billion. This data shows that foreign brands are facing challenges in their performance in the Chinese market, and Topsports International, as the agent of these brands, has naturally been affected.

Domestic brands' performance slowed down: downward economic pressure spreads to the entire industry

Not only international brands are affected, but the performance growth of Chinese local sports brands has also slowed down significantly. The financial reports of China's four major local sports brands, Li Ning, Anta, Xtep and 361 Degrees, show that their performance in the third quarter was generally lower than expected. Xtep's retail sales in the third quarter achieved year-on-year growth, but the growth rate slowed down; Anta and 361 Degrees' sales growth also slowed down, while Li Ning's retail turnover even fell by the median, and offline retail sales recorded a high single-digit decline.

The overall slowdown of China's economy has reduced consumer spending willingness, and sportswear, as a non-essential commodity, has been particularly affected. All major sports brands are facing the problem of how to improve customer stickiness and enhance brand added value to cope with the more challenging market environment in the future.

Topsports' future outlook: exploring digital transformation and diversified channels

Facing the challenges of the physical retail industry, Topsports' future development direction will focus on digitalization and diversified channel expansion. On the one hand, Topsports will continue to optimize the retail model of online and offline integration, and enhance consumers' online shopping experience through self-built e-commerce platforms and social media marketing; on the other hand, Topsports is also seeking new brand cooperation and exploring a diversified product portfolio to attract a wider range of consumer groups.

In the field of digitalization, Topsports plans to increase technology investment, improve user data analysis capabilities, and capture consumer needs through more accurate marketing methods. At the same time, Topsports is also developing new retail methods such as mini programs and live sales, actively integrating into the social e-commerce ecosystem to adapt to changes in consumption patterns.

Summary: Topsports International is facing not only changes in the Chinese market, but also changes in the global economic environment and consumer psychology

Whether Topsports International can achieve better results in future competition depends not only on its own digital transformation results, but also on how it balances development in the dynamics of globalization and localization. Against the backdrop of increasing global economic uncertainty and changing consumer demand, Topsports and its partner brands will need more flexible strategies and more efficient operating models to move forward steadily in a volatile market.