FAST NEWS: Topsports interim profit rises despite weak retail sales

The latest: Topsports International Holdings Ltd. (6110.HK), a major distributor for Nike (NKE.US) and Adidas (ADS.DE) in China, announced on Wednesday that its revenue for the six months through August rose 7.3% to 14.2 billion yuan ($1.94 billion), while its net profit jumped 16.7% to 1.34 billion yuan.

Looking up: The company’s net cash generated from operating activities during the six-month period amounted to 2.55 billion yuan, up 57.8% year-on-year, as its operational efficiency improved.

Take Note: In the second quarter of its current fiscal year, which ran through August, the company recorded a low single-digit year-on-year decline in total sales for its retail and wholesale businesses.

Digging Deeper: As a top Chinese distributor for Nike and Adidas, Topsports has faced headwinds on two major fronts over the past few years. It took a hit after some international brands stopped using cotton from China’s Xinjiang region over controversial labor practices, leading some Chinese consumers to boycott foreign apparel brands in favor of their domestic rivals. More recently, the company’s brick-and-mortar stores also suffered from frequent lockdowns and other strict Covid control measures last year. But with the end of the pandemic and the recovery of China’s economy this year, the company’s revenue and earnings returned to an upward trajectory in the first half of the year.

Market Reaction: Topsports shares rose on Thursday, closing up 3% to HK$6.10 by the midday break. The stock now trades in the middle of its 52-week range.

Translation by A. Au

Have a great investment idea but don’t know how to spread the word? We can help! Contact us for more details.

To subscribe to Bamboo Works weekly free newsletter, click here