Core Viewpoint - The company reported a decline in revenue and net profit for the fiscal year 2025, with a significant drop in profit margins, while maintaining a high dividend payout ratio of 135.0% [3][6]. Financial Performance - For the fiscal year 2025, the company achieved a revenue of 27.01 billion yuan, a year-on-year decrease of 6.6%, and a net profit attributable to shareholders of 1.29 billion yuan, down 41.9% [3]. - Earnings per share (EPS) was reported at 0.21 yuan, with a proposed final dividend of 0.02 yuan per share and a special dividend of 0.12 yuan per share, alongside an interim dividend of 0.14 yuan per share [3]. - The company experienced a decline in gross margin by 3.4 percentage points to 38.4%, and operating profit margin decreased by 3.7 percentage points to 5.9% [3][5]. Revenue Breakdown - Revenue from the main brands (Nike and Adidas) decreased by 6.1%, while other brand revenues fell by 9.9% [3]. - Retail and wholesale revenues accounted for 85.3% and 14.0% of total revenue, respectively, with retail revenue declining by 6.8% and wholesale by 5.8% [4]. Store Performance - The total number of stores decreased by 18.3%, with the company operating 5,020 stores as of February 2025 [4]. - The total sales area decreased by 12.4%, while the average sales area per store increased by 7.2% [4]. Cost and Cash Flow Management - The company reported a slight increase in expense ratio by 0.4 percentage points to 33.2%, with employee costs and rental expenses remaining stable [5]. - Inventory decreased by 4.5% to 6 billion yuan, and operating net cash flow increased by 20.0% to 3.76 billion yuan [5]. Strategic Focus - The company aims to enhance operational efficiency by closing underperforming stores and focusing on online channels, including platform e-commerce and private domain operations [6]. - The company continues to expand its brand portfolio, becoming the exclusive operator for high-end running brand SOAR Running and top outdoor brand Norrøna in the Chinese market [6]. Dividend Policy - The company has maintained a high dividend payout ratio exceeding 100% for the fiscal years 2023 to 2025, with an average dividend yield of 12.6% over the past three years [7].

Core Insights - The company reported a decline in revenue and net profit for the fiscal year 2025, with revenue at 27.01 billion RMB, down 6.6% year-on-year, and net profit at 1.29 billion RMB, down 41.9% [1][2] - The company maintained a high dividend payout ratio of 135.0%, exceeding the previous year's 100.9% [1][2] - The decline in profit was attributed to a significant drop in gross margin and a slight increase in expense ratio [1][2] Revenue Breakdown - Main brand revenue (Nike + Adidas) decreased by 6.1%, while other brand revenue fell by 9.9% [1][2] - Revenue from retail, wholesale, and esports accounted for 85.3%, 14.0%, and 0.2% of total revenue, respectively, with retail and wholesale revenues down 6.8% and 5.8% year-on-year [2][3] - The total number of stores decreased by 18.3%, with a total of 5,020 stores as of February 2025 [2][3] Financial Metrics - Gross margin decreased by 3.4 percentage points to 38.4%, primarily due to increased discounting [2][3] - The expense ratio increased by 0.4 percentage points to 33.2%, with sales, management, and financial expense ratios at 29.4%, 3.7%, and 0.1%, respectively [2][3] - Inventory decreased by 4.5% to 6 billion RMB, and accounts receivable decreased by 43.4% to 750 million RMB [3] Future Outlook - The company aims to enhance operational efficiency and reduce costs amid weak consumer demand and declining foot traffic [3][4] - The company plans to expand its brand matrix and has become the exclusive operating partner for high-end running brand SOARRunning and top outdoor brand Norrona in China [3][4] - Profit forecasts for fiscal years 2026 and 2027 have been revised down by 21% and 26%, respectively, with expected EPS of 0.21, 0.23, and 0.26 for fiscal years 2026 to 2028 [4]