According to reports, Credit Suisse has released a research note stating that TOPSPORTS (06110) management maintains guidance for full-year net profit to be flat year-on-year with an improvement in profit margins. The recent sales trend remains similar to that of the second quarter, with discounts deepening compared to last year. The bank anticipates clearer signs of recovery in the second half of the fiscal year and is keeping its earnings forecasts and target price unchanged, maintaining a neutral rating. The company's interim dividend payout ratio is at 102%, and the expected dividend yield of nearly 7% will provide downward protection for the stock price.

For the first half of the fiscal year 2026, the company reported revenue of RMB 12.3 billion, a year-on-year decline of 5.8%, mainly affected by fluctuations in demand for sports products and offline foot traffic. Despite facing operational pressures, the company managed to control gross margin and expense ratios relatively well during the half-year. The gross margin decreased slightly by 0.1 percentage points to 41.0%, impacted by discount variations and a higher online revenue share. However, the increased contribution of retail business and support from brand partners partially offset the negative effects. The operating expense ratio increased slightly by 0.1 percentage points to 33.2%, benefiting from optimized rent structure and operational team.

The net profit margin declined by 0.3 percentage points year-on-year to 6.4%, with net profit dropping 9.8% year-on-year to RMB 790 million, roughly in line with expectations. By brand, the main brand and other brands saw declines of 4.8% and 12.2% respectively, with the main brand performing better than other brands and overall performance. The management stated that it is actively collaborating with main brands to improve the management of online and offline channels and enhance overall discount levels. Furthermore, the company plans to focus on deepening its presence in the running and outdoor segments, developing new brands such as norda, soar, Ciele, and Norr?na.

The management also announced that the first Ektos running store opened on October 1st, aiming to create a multifunctional space that caters to runners and provides a new retail experience. The company continues to adjust its store structure and improve quality. As of the end of August 2025, the net number of directly operated stores decreased by 332 to 4,688, continuing a downward trend, with total sales area down 14.1% year-on-year. However, the average store area increased by 6.5% year-on-year. The management reported that offline foot traffic remains pressured, with a double-digit decline in same-store foot traffic during the period.

The company is implementing a "selection + optimization" principle, applying stricter standards for new and remodeled stores, resulting in larger store sizes with more restrained renovation investments. Meanwhile, it is continuing to enhance its online business development, achieving double-digit year-on-year growth in online retail sales during the period, and actively exploring a "1 (offline store) + N (online multi-scenario layout)" diversified operational model.