Core Viewpoint - The latest interim results of the domestic sports retail operator, Tmall (滔搏), show a decline in key performance indicators, indicating challenges in the retail environment and a need for strategic transformation [1][2][3]. Financial Performance - For the first half of the fiscal year ending August 31, 2025, Tmall reported revenue of 12.299 billion yuan, a year-on-year decrease of 5.79% - The net profit attributable to shareholders was 789 million yuan, down 9.69% - Operating profit fell to 994 million yuan, a decline of 11.3% [3][4]. Brand Performance - Revenue from core brands Nike and Adidas decreased by 4.8% to 10.811 billion yuan, accounting for 87.9% of total revenue - Other brands, including PUMA and Asics, saw a revenue decline of 12.2%, representing 11.5% of total revenue - Non-brand retail income, including joint venture fees, dropped by 15.2%, while e-sports revenue fell by 39.7% [3][4]. Profitability Metrics - Overall gross margin slightly decreased by 0.1 percentage points to 41% - Operating profit margin declined by 0.5 percentage points to 8.1% - Net profit margin fell by 0.3 percentage points to 6.4% [4]. Store Network and Strategy - As of August 31, 2025, the number of direct-operated stores decreased to 4,688, nearly a 40% reduction from the historical peak of 8,395 in 2021 - Store closures primarily affected street shops and inefficient shopping centers, while online business growth partially offset offline revenue decline [5][6]. Strategic Transformation - Tmall is shifting focus towards niche markets such as outdoor and running segments, introducing brands like norda™, Norrøna, and Soar as exclusive partners in China - The company aims to create a differentiated operational strategy for these high-end brands, emphasizing community integration and user engagement [6][8]. - Tmall's management envisions a transition from being a mere distributor to a comprehensive sports retail operator, providing full-chain solutions in brand operation and consumer service [8][9].