As the economic downturn continues, China’s largest sports goods retailer, TAOBO International, appears to be in trouble. According to TAOBO’s semi-annual report, the company’s net profit has dropped by 34.65% year-on-year, with a net decrease of 331 company-owned stores. This company is a strategic partner for many major international sports footwear and apparel brands in China.
Recently, TAOBO International released its mid-year performance report as of August 31, 2024, showing that in the first half of the 2024/25 fiscal year, TAOBO International achieved a revenue of 13.055 billion yuan, a 7.9% year-on-year decrease, and a net profit of 874 million yuan, a 34.65% year-on-year decrease.
Regarding the reasons for the decline in performance, TAOBO International explained that offline stores continue to face pressure from low foot traffic, with a trend of shifting consumer consumption scenes from offline to online, increasing the difficulty of customer acquisition offline. Consumer shopping behavior is becoming more rational, with “cost-performance ratio” and “comfort-price ratio” becoming key considerations in consumer decision-making.
Additionally, since the outbreak of the COVID-19 epidemic in China, TAOBO International has been continuously reducing the number of offline stores. From the 2021/22 fiscal year to the 2023/24 fiscal year, the number of TAOBO International’s offline stores was 7,695, 6,565, and 6,144, respectively. According to the semi-annual report, as of the end of August this year, the company’s company-owned store count was 5,813, a net decrease of 331 stores, down 6.4% year-on-year.
TAOBO International is the largest sports goods retailer in China and a strategic partner for many major international sports footwear and apparel brands in the Chinese market, including Nike, Adidas, PUMA, Converse, Reebok, Skechers, Vans, The North Face, Asics, and Onitsuka Tiger.
TAOBO International has been continuously reducing its offline store count since the 2021 fiscal year, potentially related to the ongoing shrinkage of the Chinese economy or the surge of anti-foreign goods movements by the authorities.
In 2021, Western countries condemned the dire human rights situation in Xinjiang under the Communist rule, imposing sanctions on relevant Communist officials, triggering a strong backlash from the Chinese authorities. Official media and online army initiated boycott actions against many international brands like Nike, Adidas, PUMA, Converse, and New Balance that had previously released statements on “refusing Xinjiang cotton”.
According to financial reports, Nike’s performance in the Chinese market continues to decline this year. According to Nike’s fiscal Q1 2025 report, Nike’s Greater China revenue was $1.666 billion, a 4% year-on-year decrease.
As China’s economy continues to decline, domestic sports brands are also experiencing a downward trend in performance.
As of now, all four major domestic sports brands in China have disclosed their third-quarter operating conditions.
According to a report by Southern Metropolis Daily, on October 23, Chinese sports goods company Xtep released the operating conditions of its mainland China business in the third quarter. In the third quarter, Xtep’s main brand retail sales achieved a mid-single-digit growth year-on-year. Comparing with Xtep’s operating situation in the same period last year, the growth rate of retail sales has slowed compared to the same period last year.
In addition to Xtep, ANTA and 361 Degrees also experienced a slowdown in revenue growth, while LI-NING saw a decline.
LI-NING’s retail turnover at sales points (excluding LI-NING YOUNG) in the third quarter recorded a mid-single-digit decrease year-on-year. Specifically, the retail sales of the offline channels (including retail and wholesale) saw a high single-digit decrease.