By Yifan Wang
Topsports International Holdings shares were sharply lower on Wednesday in Hong Kong, after the Chinese sportswear retailer posted a drop in its net profit for its fiscal year ended in February.
The stock fell as much as 9.6%, and was last down 8.0% at 6.35 Hong Kong dollars (US$0.81).
The selloff came after the Topsports’ said its net profit fell 25% in its last fiscal year, mainly dragged by weakness in Chinese consumption.
But many analysts are optimistic about Topsports’ recovery momentum after the economy’s post-Covid reopening.
Citi analysts noted that the company’s latest results saw an “upside surprise” with improving inventory levels, where new arrivals are making up a higher percentage of total stocks as older products are cleared out. This likely “paves a solid foundation for both top-line growth acceleration and gross profit margin improvement,” as a more healthy inventory profile could allow Topsports to reduce its discounts.
Write to Yifan Wang at yifan.wang@wsj.com
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