(27 October 2020—Hong Kong) TOPSPORTS INTERNATIONAL HOLDINGS LIMITED (“Topsports” or the “Company”, stock code: 6110) announced its unaudited interim results for the six months ended 31 August 2020 (the “Reporting Period”).

The outbreak of Novel Coronavirus Disease (COVID-19) (“the Pandemic”) has brought forth the significant impact on the overall retail industry. Topsports firmly grasped growth opportunities amidst the challenging environment, continued to expand its consumer-centric, omnipresent and multi-occasional sportswear retail and service platform, implemented strategy of "Optimized Location + Optimized Operations" for its brick-and-mortar store network and focused on expanding its membership system at scale. In light of the impact, the Company has accelerated its pace of digital transformation to empower business with “Precision + Efficiency”, in order to accomplish the seamless integration of both physical and virtual consumer engagement occasions through its rich-set of touch points, and keep on delivering high quality service experiences for Chinese sports enthusiasts and consumers at large.

Due to the impact of the Pandemic, the Company’s total revenue during the Reporting Period decreased by 7.0 % to RMB15.8 billion. Nonetheless, the Company still maintain the quality profitability as a result of strict discount management and cost control. The gross margin was 41.6%, with a year-on-year decrease of 2.1 percentage points and the operating profit margin was 12.1%, with only a slight decrease of 0.2 percentage points over the same period of last year. The profit margin attributable to equity holders of the company was 8.3%, with a year-on-year decrease of 0.4 percentage points. Basic earnings per share was RMB21.11 cents, declining by 24.4 % mainly because of the inclusion of new shares issued upon the global offering in October 2019. Adjusted earnings per share decreased by 11.0 %, which accounted for the new shares issued upon the global offering as if they have been issued throughout the years presented. During the Reporting Period, the net cash generated from operating activities decreased by 10.4% year-on-year to RMB1,981.3 million. If the difference in income tax payment was excluded, then the net cash generated from operations would have increased by 7.3% year-on-year to RMB2, 673.8 million. Meanwhile, with the commitment to creating value for shareholders, the Board declared an interim dividend of RMB12.00 cents per ordinary share and a special dividend of RMB40.00 cents per ordinary share for the Financial Year ending 28 February 2021.

Retail Network with “Optimized Location + Optimized Operations”

In the light of the Pandemic impact, the Company persistently remained focus on optimized selection of store location and store upgrade for its direct-operated retail store network, speeding up the closure of low-productivity and loss-making stores. The Company directly operated 8,156 stores in nearly 300 cities across the country as of 31 August 2020. As of 31 August 2020, the Company recorded a net decrease of 209 stores with gross selling area increasing by 5.2% as compared with 31 August 2019. In terms of the single store area, the percentage of large stores continued to grow, based on the Company’s "Optimized Location + Optimized Operations". Among these, stores over 300 sq.m accounted for 8.0 %, representing an increase of 0.7 percentage points as compared with 29 February 2020, and an increase of 1.5 percentage points as compared with 31 August 2019. While prudently opening new stores, the Company has proactively upgraded the stores with proven higher sales potential to create a higher-quality interactive shopping experience, so as to enhance its retail network advantages and further improve efficiency.

Diverse Membership Activities and Benefits with a Focus on Scaling up the Membership Program

The Company continued to offer services to members through its multiple platforms with various activities and benefits. In addition to the existing TOPSPORTS Wechat Official Corporate Account, the Company launched the TOPSPORTS app on 14 February 2020, which integrates membership activities, points redemption, online purchase, limited sales and other functions in one. During the Reporting Period, by integrating online activities with brick-and-mortar stores, the Company has continued to improve Topsports’ brand equity for loyal members and created IP of “Topsports Membership Week”. With this event, the Company has reactivated inactive members and enhance member stickiness with the help of targeted marketing campaigns. As of 31 August 2020, the number of users has exceeded 1, 100 thousand. As of 31 August 2020, the Company cumulative number of enrolled members reached 33.1 million. During the quarters as of 31 May 2020 and 31 August 2020, 96.7% and 97.3% of the total in-store retail sales (inclusive of VAT) were contributed by its members, respectively for each quarter.

Accelerate the Pace of Digital Transformation to Empower Business with “Precision + Efficiency”

The outbreak of COVID-19 in early 2020 has led to a rapid shift in major consumption settings of sportswear products from the physical to the virtual realm. In response, the Company accelerated its pace of digital transformation, which enables the company to interact with consumers more intimately, equip its store-level operation with digital capability and progress to advance its operations precisely and efficiently with big-data analysis and sophisticated system. The Company continued to expand its connections with consumers across multiple digital occasions. With the operation of store-level social communities, the Company initiated more themed topics and content as well as new live streaming format and organized cross-setting consumer interactions both physically and virtually. In the first half of the year, the Company steadily improved the coverage of store-level mini-programs and the application of mobile payment. The connected inventory sharing function further assisted its stores in stock management with technological tools, so as to ensure product supply and reduce merchandising risks.

Outlook

The Company will continue to accelerate its digital transformation, implement store networks with “Optimized Location + Optimized Operations”, and leverage its digital capabilities to strengthen its seamless engagement with consumers through omnipresent, multi-occasional connections. It will also expand its brand offerings and deepen its cooperation with brand partners, and further enrich its customer-centric platform offerings.

The management of Topsports commented that in the past year, since its successful listing on the Hong Kong Stock Exchange on 10 October 2019, Topsports has continued to earn trust and support over the past year from the Company’s consumers, employees, brands as well as other partners, to whom the Company expresses its sincere gratitude. As the Company take on more roles and responsibilities throughout its new journey, looking ahead, the Company will continue to forge ahead towards its goals with management team and all of its employees stand ready to  continually create long-term value for its consumers, shareholders, and all of its partners and stakeholders sustainably.

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About Topsports International Holdings Limited

Topsports International Holdings Limited operates a consumer-centric, omnipresent and multi-occasional sportswear retail and service platform in China. The Company has the industry-leading nationwide and deeply penetrated directly-operated store network of sportswear products in China, covering nearly 300 cities with more than 8,000 direct sales outlets. It has established a localized, social communities and a sizeable membership base, pioneering various technologies to reach consumers digitally and exploring different consumption settings to cater to customer demand more precisely and efficiently. The Company is dedicated to enhancing its engagement with and understanding of the Chinese consumers in order to offer them better products and experiences alongside its brand partners.