Core Viewpoint - The article discusses the challenges faced by the sports retail operator, Tmall (滔搏), highlighting a significant decline in profits and the impact of market dynamics on its operations, particularly in relation to major brands like Nike and Adidas [2][3][4]. Group 1: Financial Performance - For the fiscal year ending February 2025, Tmall's profit dropped to 1.29 billion yuan, a 42% year-on-year decline, marking a record low since its listing [2]. - Tmall's revenue fell by 11.5% and 15.1% in the fiscal years 2022 and 2023, respectively, with a notable decrease in store numbers [17]. - As of February 2025, Tmall had 5,020 offline stores, an 18.3% year-on-year decrease, while inventory turnover days remained high at four and a half months [18][17]. Group 2: Market Dynamics - Major brands like Nike and Adidas are still struggling in the Chinese market, with Nike experiencing a 17% year-on-year sales decline from December to February [3]. - Tmall's revenue structure has been heavily reliant on Nike and Adidas, contributing over 85% to its performance, which poses risks due to the brands' shift towards direct-to-consumer (DTC) sales [9][11]. - The rise of domestic brands such as Anta and Li Ning has intensified competition, further complicating Tmall's market position [15]. Group 3: Strategic Initiatives - Tmall has increased online promotions to clear inventory, resulting in a 4.5% year-on-year decline in stock levels and a drop in gross margin to 38.4%, the first time below 40% [4]. - The company is focusing on transforming its brand portfolio by acquiring exclusive operating rights for high-end outdoor brands like Norrøna and Soar in Greater China [5][27]. - Tmall aims to enhance its online presence through various e-commerce strategies, currently operating 2,300 mini-program stores and 500 accounts on Douyin and WeChat [20]. Group 4: Future Outlook - Tmall's strategy includes expanding its brand matrix in vertical markets such as outdoor and trail running, with partnerships established with brands like HOKA ONE ONE and KAILAS [22][23]. - Despite the challenges, Tmall's cash and cash equivalents reached 2.59 billion yuan, a year-on-year increase of over 30%, providing some financial flexibility for future investments [31]. - The company acknowledges the need for a more nuanced approach to brand management, emphasizing the importance of both online and offline channels working synergistically [35].

Core Insights - Tmall has been actively expanding its brand matrix by acquiring exclusive operational rights for high-end outdoor brand Norrna and professional running brand soar in China, which has garnered significant attention in the industry [1] - The company aims to capture the growing demand for high-quality products among Chinese consumers, recognizing that high-end brands require time to establish themselves in the market [5][10] - The retail philosophy emphasizes that every detail in the retail experience amplifies brand value, highlighting the importance of meticulous execution in high-end retail [4][10] Brand Strategy - The company is not solely focused on price points when selecting brands but prioritizes the quality and intrinsic value of the brands, targeting consumers who seek exceptional product quality and unique brand experiences [8] - Norrna's waterproof jackets start at approximately 4,800 yuan, indicating a significant price positioning compared to other brands in the market [5] - The company plans to gradually establish brand recognition through online channels before expanding to offline stores in major cities like Beijing and Shanghai [9] Market Positioning - The company has identified three potential growth areas in the Chinese sports consumption market, including high-end outdoor, running, and women's sports segments [11] - The operational strategy includes a dynamic balance approach to store expansion, focusing on optimizing underperforming stores while enhancing flagship stores that serve as brand showcases and traffic hubs [11] - Over the past two years, the company has opened 2,800 online stores, reflecting its commitment to adapting to market trends [11]