Guoyuan International: Suggest focusing on TOPSPORTS (06110) core brand and increase focus on Greater China region.

Guoyuan International released a research report stating that TOPSPORTS (06110) has experienced a turning point to some extent in its operational aspect, mainly reflected in the stabilization of net store closure numbers, continuous improvement in unit sales efficiency, and substantial support for its core brand. TOPSPORTS's core brand NIKE, Inc. Class B (NKE.US) has gradually launched new products into the market, and it is recommended to pay attention to this. Key points of Guoyuan International: Events The company announced its third-quarter operating performance on December 22 and held a management conference call. In the third quarter of FY2025/26 (September to November), the sales amount of retail and wholesale business decreased by a high single-digit year-on-year, the gross sales area decreased by -1.3% from the end of the previous quarter, and decreased by -13.4% year-on-year. Pressure on operations but meeting expectations, challenges faced in maintaining flat annual profits target Q3 sales declined by a high single-digit year-on-year, with retail performance better than wholesale. Offline sales slightly improved due to a low base, but online growth slowed due to a high base. In terms of discounts, the year-on-year increase was slightly deepened due to the increase in online sales proportion, but narrowed compared to the first half of the fiscal year. The management admitted that the macro environment and low offline traffic still pose challenges to meeting the target of maintaining flat profits year-on-year, but the company expects that there may be deviations in the final performance, albeit within a controllable range. Increased support from NIKE, Inc. Class B, focusing on inventory issues in Greater China NIKE, Inc. Class B has increased its focus on inventory and the high proportion of old products in Greater China, through increasing the repurchase of old goods from core retailers and writing off after recovery. This not only reduces the operational funding pressure for retail partners but also improves the ratio of new and old products for the brand in Greater China. The company has to a certain extent passed a turning point in its operations, mainly reflected in the stabilization of net store closure numbers, continuous improvement in unit sales efficiency, and substantial support for its core brand. These correspond to the stabilization of the company's operational adjustments, the effectiveness of the new business model, and the expected reflection of partner support on the financial statements. The firm believes that the recovery of the consumer environment still needs to be considered, and the effectiveness of NIKE, Inc. Class B's new products in the terminal market will determine the actual recovery of the company's operations. The firm will pay close attention to the improvement in profit margins in the second half of the fiscal year and the feedback from the terminal market on NIKE, Inc. Class B's new products in the future.