Guosheng Securities released a research report stating that TOPSPORTS (06110), as a leading downstream channel company in the sports footwear and apparel industry, has optimized its terminal store structure and improved retail efficiency through digital transformation. Efficient membership operations continue to strengthen user loyalty. The firm forecasts the company's net profit attributable to shareholders for FY2026-FY2028 to be RMB 1.229 billion, RMB 1.379 billion, and RMB 1.533 billion, respectively, with the current price corresponding to a FY2026 PE of 14x. The "Buy" rating is maintained.
TOPSPORTS released its quarterly operational update, reporting a high single-digit year-on-year decline in total channel sales (including retail and wholesale, tax-inclusive) for FY2026Q3 (September-November 2025). Gross sales area of directly operated stores fell by 1.3% quarter-on-quarter and 13.4% year-on-year.
Guosheng Securities highlighted the following key points:
**Offline Sales May Still Face Pressure in FY2026Q3 Amid Customer Flow Fluctuations and Store Closures** Sales in FY2026Q3 declined by a high single-digit percentage, with retail performance expected to outperform wholesale. However, offline retail sales may still see a decline due to: 1) Store closures—net closures of 332 stores in FY2026H1 reduced the total to 4,688, with gross sales area of directly operated stores down 13.4% year-on-year and 1.3% quarter-on-quarter as of November 2025. 2) Fluctuations in the consumption environment and market competition, which may continue to pressure foot traffic and discounts.
Looking ahead, the firm expects net store closures in FY2026H2 to decrease compared to FY2026H1, with average store quality improving after clearing inefficient locations.
**E-commerce Likely to Sustain Growth Momentum in FY2026Q3** Thanks to strong e-commerce capabilities, online sales are expected to maintain growth. TOPSPORTS has enhanced its digital ecosystem by integrating offline stores with online platforms, including Douyin livestreaming, Xiaohongshu, WeChat mini-programs, and instant retail channels. The company is also refining its operations on platform and content-based e-commerce.
**Expanding Brand Portfolio in Running and Outdoor Segments** TOPSPORTS is deepening its presence in running and outdoor markets through partnerships with brands like Norda, Soar, Ciele, and Norrøna. It has also launched its own running ecosystem brand, ektos, which opened a store in Shanghai and gained visibility at the Shanghai Marathon.
Long-term, TOPSPORTS aims to leverage its marketing and retail strengths to help new brands expand and capitalize on market opportunities.
**FY2026 Outlook: Profit Decline Expected, Focus on Nike’s Inventory Clearance and New Product Performance** Given ongoing consumption volatility, Guosheng Securities forecasts a 7% revenue decline and a 4% drop in net profit for FY2026. While adidas shows relatively strong sales in Greater China (6% growth in July-September 2025 on a currency-neutral basis), Nike is still clearing inventory (16% decline in Greater China for September-November 2025). Nike has implemented measures like repurchasing old inventory and cautious shipments for Spring/Summer 2026 products. Long-term, Nike’s brand strength and product optimization are expected to drive gradual improvement in Greater China.
**Risks:** Slowing terminal sales, operational risks from changes in brand partnerships, and slower-than-expected store optimization.
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