{"text":[[{"start":4.88,"text":"Companies from many consumer sectors are running against the wind in China these days, though certain groups are bucking the trend. One of those is health and sports, which have remained on a growth track thanks to greater awareness of their importance in a post-pandemic world. Data from the China Sporting Goods Federation shows online sales for athletic gear jumped 22.6% last year, fueled by growing popularity in trail running, camping and road racing."}],[{"start":37.82,"text":"Like many consumers around the world, China’s new middle class is demanding more than simple athletic functionality, increasingly seeking products that align with their lifestyles and can bring a sense of community. That pivot from focus on performance to experience-driven engagement is redrawing competitive lines across the nation’s vibrant sports industry, including the huge market for sporting goods."}],[{"start":65.46000000000001,"text":"Topsports International Holdings Ltd. (6110.HK) in many ways epitomizes this seismic shift. The retail titan, once king of the Chinese sportswear hill as the top local distributor for Nike and Adidas, is taking a different path lately as it morphs into a “lifestyle brand operator.” But such transformation naturally carries costs, which shows up in stumbling revenue and profits in Topsports’ latest financial report released last week."}],[{"start":97.54,"text":"That report shows the company’s revenue fell 5.8% year-on-year to 12.3 billion yuan ($1.73 billion) during the six months through August, the first half of its fiscal year. Its net profit also slid 9.7% to 789 million yuan. Management cited softness in the company’s brick-and-mortar retail business and decelerating growth for its core partner brands as near-term drags. Crucially, the company’s gross margin held steady at 41%, supported by declining inventory levels and sales expenses. The company ended the period with 2.54 billion yuan in cash, maintaining a net cash position of approximately 1.27 billion yuan after deducting short-term debt, underscoring that its financial position remains healthy."}],[{"start":155.43,"text":"Topsports began its strategic pivot last year as many global brands were accelerating their direct-to-consumer (DTC) business in a bid to trim their distributor networks. The company joined that tide by reducing its own reliance on distributors, as well as shrinking its retail footprint from a peak of 8,395 stores to roughly 5,020 at present. Simultaneously, it pursued new directions with moves into performance running and premium outdoor gear."}],[{"start":192.63,"text":"Community-driven retail"}],[{"start":194.56,"text":"A key step in its new direction came earlier this year when the company opened its inaugural ektos running multi-brand store on Shanghai’s Yuyuan Road, part of an initiative to develop its own brands. The concept brings together a number of foreign brands that count Topsports as their exclusive China distributor, including Canadian trail running brand Norda, British running brand Soar and Canada’s Ciele, alongside premium products from Hoka and Adidas. Topsports says ektos aims to become more than just a simple retailing point by creating an ecosystem that brings together curated gear, community and culture for running enthusiasts."}],[{"start":239.39,"text":"Vice president Ding Chao touted ektos as a platform that promotes running culture. He said that every detail, from store design to operational workflows, centers on synergies created by community. Positioned at the junction of several major running paths in Shanghai, the maiden location offers shower facilities and gathering zones for club events and brand immersion. Such a grass roots-driven “community-based retail” model aims to forge deeper consumer ties, which will presumably result in greater loyalty to the ektos brand."}],[{"start":277.14,"text":"Beyond ektos, Topsports has also been aggressively signing new global brand partnerships, including exclusive China licensing deals with Norwegian high-alpine outfitter Norrøna, Canada’s Norda and Ciele, plus Soar. Its current stable of end-to-end services for such brands includes brand strategy, marketing campaigns, and channel development, upgrading its own role from simple distributor."}],[{"start":305.87,"text":"In the digital realm, Topsports champions an omni-channel retail approach. During the reporting period, it oversaw over 800 accounts on Douyin and other popular video platforms, operated over 3,600 mini-program storefronts and 3,700 real-time e-commerce channels, and ranked first in Douyin’s sports and outdoor category."}],[{"start":332.57,"text":"The company’s double-digit growth for online GMV during the latest six-month period was partly offset by declines for its physical store network. Its membership base reached 89.1 million, driving 93% of total retail sales, with top-tier members logging average transaction values six times the overall average. Such metrics showcase the company’s move from a sales-driven to a more user-centric model."}],[{"start":364.15,"text":"Shares rebound"}],[{"start":365.92999999999995,"text":"Many of Topsports’ newly signed brands have yet to contribute major revenue, but they are helping to reposition the company. Norda and Soar often quickly cultivate loyal followings through trail running circles. Management calls ektos its anchor for developing a homegrown athletic ecosystem akin to Lululemon, anticipating collaboration synergy across its growing stable of licensed brands."}],[{"start":394.92999999999995,"text":"Despite the falling revenue and profits in the latest reporting period, Topsports’ stock climbed 5.8% to HK$3.48 on the first trading day after the announcement, bringing its year-to-date gains to 16%. The company’s price-to-earnings (P/E) multiple of 16.5 is slightly ahead of peers Anta Sports (2020.HK) at 15.4 and Li Ning (2331.HK) at 15.7, signaling investor confidence in its repositioning. Its high dividend payout ratios and strong net cash position serve to further fortify investor sentiment."}],[{"start":443.40999999999997,"text":"While soft consumer sentiment and its own transition could weigh on Topsports in the near-term, its long game will center on whether it can build a business around “performance sports lifestyles.” If ektos can tap into that ethos with its community focus and unique cluster of brands, the company could set the standard for China’s next generation of athletic retail."}],[{"start":476.18999999999994,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1761790408_9865.mp3"}