A sportswear retailer, Pou Sheng International, continues to face sales pressures, yet the ongoing adjustments to its store network, inventory, and costs are beginning to yield positive results on the bottom line. On August 12, the company released its unaudited interim results. For the first half of the year, the company generated revenue of 8.965 billion yuan, a 2.1% decline year-over-year, while net profit attributable to shareholders reached 244 million yuan, representing a 29.9% increase.

Profit improvement was first driven by better discount and inventory management. Pou Sheng stated that it continued to optimize inventory age, strictly control discounts, and enhance the sales performance of current-season full-price and high-margin products during the first half. Instead of relying solely on price cuts to clear stock quickly, the company is attempting to balance inventory turnover with sales quality. By the end of June, Pou Sheng's inventory had decreased from 5.02 billion yuan at the end of 2025 to 4.668 billion yuan, a drop of 7%. The proportion of inventory older than 12 months fell below 9%. The net change in inventory provisions charged to cost of sales also dropped from 18.754 million yuan in the same period last year to just 160,000 yuan, significantly reducing the drag on profit from aged inventory write-downs. However, the average inventory turnover days increased from 146 days to 148 days, indicating that while inventory value and impairment pressure have decreased, the efficiency of merchandise turnover has not yet shown significant improvement.

A more direct boost to profit came from expense reductions. In the first half, Pou Sheng's selling and distribution expenses fell by approximately 3.7% year-over-year, and administrative expenses dropped by 7.6%, with total expenses decreasing by 4.2%. The company attributed the expense improvement to organizational restructuring, tighter rent control, and enhanced personnel efficiency. As of the end of June, Pou Sheng operated 3,110 direct-sale stores in Greater China, a net decrease of 200 stores from the beginning of the year.

Beyond store closures, Pou Sheng is also revamping its inventory flow and brand portfolio. The company continues to expand its multi-brand outlet store concept, "Sheng Dao Cang," using it as a platform for clearing inventory and incubating new brands. It is also improving product flow across different channels through methods like integrating brand partners' inventory and connecting national inventory pools for live-streaming e-commerce on Douyin. New resources are being directed more towards specialized sports categories. Pou Sheng plans to continue expanding its presence in outdoor brand Dynafit, casual outdoor brand Pony 1972, and yoga brand XEXYMIX. It also intends to develop themed multi-brand stores, content-driven e-commerce, and instant retail, reducing its reliance on traditional big-brand distribution and inefficient physical store networks.

The ongoing transformation is also accompanied by pressure from the channel adjustments of Nike. Pou Sheng previously announced that, effective January 1, 2027, it would terminate its online platform sales of Nike products in mainland China. This business contributed approximately 15% of Pou Sheng's revenue in 2025, but the company indicated its profit contribution was not significant, and its offline partnership will continue. Goldman Sachs believes that the impact of Nike's channel adjustments on Pou Sheng's revenue will be greater than the impact on profit. Therefore, the firm maintains a "Buy" rating but has lowered its revenue and net profit forecasts for 2027 and 2028. Market focus has also shifted from short-term profit rebounds to whether Pou Sheng can fill the revenue gap through Nike's offline channels, other international brands, and its exclusive agency brands. The company has demonstrated that store closures, cost control, and inventory optimization can repair profits, but revenue has not yet returned to growth, and gross margins have not yet recovered to their full-year 2024 levels. As the room for further expense compression narrows, the next phase for Pou Sheng will be to prove it can stabilize sales while maintaining profit margins and establish new revenue sources before the termination of the Nike online authorization.