POU SHENG INT'L Accelerates Store Closures and Cost Control, First-Half Profit Rises by Nearly 30%

The sales performance of sports retailer POU SHENG INT'L remains under pressure, but the previously ongoing adjustments to stores, inventory, and expenses have begun to yield results in profitability.

On August 12, POU SHENG INT'L released its unaudited interim results. In the first half of the year, the company achieved operating revenue of RMB 8.965 billion, a year-on-year decrease of 2.1%; net profit attributable to shareholders was RMB 244 million, a year-on-year increase of 29.9%.

The improvement in profit primarily stems from discount and inventory management.

POU SHENG stated that it continued to optimize inventory aging, strictly controlled discounts, and improved the sales performance of full-price and high-margin products for the current season. Rather than relying on price cuts to quickly clear stock, the company is attempting to balance inventory depletion with sales quality.

As of the end of June, POU SHENG's inventory decreased by 7% from RMB 5.020 billion at the end of 2025 to RMB 4.668 billion; the proportion of inventory older than 12 months was below 9%.

The net change in inventory provisions included in the cost of sales also dropped from RMB 18.754 million in the same period last year to RMB 160,000, significantly reducing the drag on profits from impairments on older inventory.

However, the average inventory turnover period increased from 146 days to 148 days, indicating that while inventory value and impairment pressure have decreased, the efficiency of product turnover has not yet shown significant improvement.

A more direct contributor to profit growth came from expense contraction.

In the first half of the year, POU SHENG's selling and distribution expenses decreased by approximately 3.7% year-on-year, and administrative expenses decreased by 7.6%, resulting in a combined decrease of 4.2% in these two expense categories. The company attributed the expense improvements to organizational restructuring, rent control, and enhanced personnel efficiency.

As of the end of June, POU SHENG operated 3,110 directly operated stores in Greater China, a net decrease of 200 stores from the beginning of the year.

Beyond store closures, POU SHENG is also revamping inventory flow and brand portfolios.

The company continues to expand its multi-brand outlet store concept, "Shengdao Cang," using it as a platform for inventory depletion and incubating new brands. It also facilitates product movement across different channels through methods such as integrating inventory with brand partners and connecting national inventory via Douyin live streaming.

New resources are being directed more towards niche sports categories.

POU SHENG plans to continue laying out outdoor brand Dynafit, casual outdoor brand Pony 1972, and yoga brand XEXYMIX, while developing themed multi-brand stores, content e-commerce, and instant retail to reduce reliance on traditional large-brand distribution and inefficient physical networks.

Accompanying this transformation is the pressure brought by adjustments to the Nike channel.

POU SHENG previously announced that starting January 1, 2027, the company will terminate the sale of Nike products on online platforms in mainland China.

This business contributed approximately 15% of POU SHENG's revenue in 2025, but the company stated that its profit contribution was not significant, and offline cooperation between the two parties will continue.

Goldman Sachs believes that the impact of the Nike channel adjustment on POU SHENG's revenue will be greater than its impact on profit, thus maintaining a "Buy" rating but lowering its revenue and net profit forecasts for 2027 to 2028.

The market's focus has shifted from short-term profit rebound to whether POU SHENG can fill the revenue gap through Nike's offline channels, other international brands, and exclusive agency brands.

The company has demonstrated that store closures, cost control, and inventory optimization can repair profits, but revenue has not yet returned to growth, and gross margin has not yet returned to the full-year 2024 level.

As the room for further expense compression gradually narrows, the next stage for POU SHENG is to prove whether it can stabilize sales while maintaining profit margins and establish new revenue sources before the termination of its online Nike authorization.