Dear Shareholders,
I am pleased to present the annual results of Pou Sheng International (Holdings) Limited (the “Company” and together with its subsidiaries, the “Group”) for the financial year ended December 31, 2024, to the shareholders of the Company (the “Shareholders”).
2024 was a challenging year for the Group, and indeed, for many retailers across mainland China. While remaining optimistic about the long-term growth opportunities within the sports industry, the current challenges in short-term macroeconomic growth momentum have led to weakened consumer confidence. We faced a highly mixed consumption landscape and intense competition from markdowns and promotions, resulting in reduced footfall and sales, particularly within our physical retail channels, which posed certain challenges to our operations.
Despite these challenges, we sustained our profitability and improved our margins by prioritising digital transformation, operational excellence, store-level efficiency enhancement, and channel mix optimisation. We also successfully managed discount levels across all channels while continually improving inventory days through dynamic inventory management and inventory integration programmes with brand partners, amidst a promotional landscape. We are immensely proud of this achievement in the current retail environment.
Meanwhile, we further advanced our digital capabilities by adopting an online multi-storefront model across our omni-channels public traffic domain. This effort was complemented by continued improvements to our private channel domain, which is spearheaded by our customised and customer-focused Pan-WeChat Ecosphere, which includes content-rich WeChat stores and live-streaming on Douyin by our Key Opinion Staff, alongside a fully integrated inventory within Douyin live-streams. It also includes our YYsports Douyin stores, which are Douyin accounts authorised by selected brand partners. Our fast-growing and maturing online ecosystem has evolved into a high-quality source of revenue by seamlessly integrating our offline presence with the online community. It has also promoted better conversion rates, shorter sales cycles and more full-price in-season sales – all while maintaining a human touch.
We also made great strides in optimising the mix of our physical stores and diversifying our business portfolio in ways that expand our presence in different sports categories, product segments and city tiers. These include the opening of new mono-brand stores for Crocs, Saucony, Pony 1972, and the Korean yoga brand XEXYMIX. Additionally, we expanded Jack Wolfskin in the outdoor vertical segment and introduced the new brand Dynafit, effectively targeting segmented consumption patterns. We also developed channels for high-quality and value-for-money merchandise through our new one-stop shop YYQUALITY multi-brand outlet store concept. These efforts tie in closely with the continued right-sizing of our physical directly-operated store network and the strengthening of our partnerships with sub-distributors for effective penetration into lower-tier cities.
In 2024, we strengthened our operational excellence through the further upgrade and optimisation of our enterprise resource planning (“ERP”) system, which continually enhancing the quality of our strategic decision-making at the management level. Additionally, we are utilising digital empowerment tools, such as artificial intelligence shift scheduling within our stores, to further improve our daily operational efficiency.
Our holistic and disciplined approach to channel planning and management, coupled with our solid profitability and cash management, preserved our financial strength. The Board has recommended a final dividend of HK$0.01 per share and a special dividend of HK$0.01 per share. Together with the interim ordinary and special dividends of HK$0.04 per share paid during the year, our total full-year dividend will amount to HK$0.06 per share, achieving a payout ratio of 60%. Both the dividend amount and payout ratio have doubled compared to previous year, further demonstrating our commitment to enhancing shareholder returns.
Looking ahead, 2025 is likely to be another challenging year. Our strategic priorities will center on balancing sales momentum and profitability by further advancing our digital and solid channel strategies, enhancing our business portfolio, and strengthening our strategic partnerships with brand partners to drive quality sales and foster a virtuous inventory cycle.
Despite recent shifts in consumer patterns, the long-term demand for sports goods and services across the Greater China region remains highly promising. According to the China Outdoor Sports Industry Development Report (2023-2024)《中國戶外運動產業發展報告(2023-2024)》commissioned by the General Administration of Sport of China, the average annual consumption of outdoor sports enthusiasts on outdoor activities remained at a high level in the 2023-2024 period. Furthermore, more than ten provinces, autonomous regions and municipalities, including provinces such as Yunnan, Hubei and Sichuan, where with significant growth potential, have developed and issued outdoor sports industry development plans, providing additional policy support for the growth of the domestic sports industry. Looking forward, capturing opportunities in segmented markets and diversifying our portfolio are essential for appealing to consumer trends and capturing business opportunities.
Millennials continue to make up the vast majority of sports enthusiasts, having laid an indispensable and core foundation for the long-term prosperity of sports industry, while Generation Z is posed to become an important force in future sports consumption. We will always be here to cater to the personalised needs of our consumers, providing memorable shopping experiences by leveraging our experience-driven physical stores, digital capabilities, and multi-faceted operation matrix, and by further deepening our links and cooperation with our brand partners, in line with our vision of “Make Sports Your Life”.
On behalf of the Group, I extend our heartfelt gratitude to our customers, business partners, financial institutions, shareholders and our dedicated colleagues for their unwavering support, trust and efforts. We are excited about the promising years ahead and remain committed to delivering sustainable growth and quality returns to our shareholders.
Chairman
Hong Kong
March 11, 2025
SONG Hua, is currently a Vice President of the Group, in charge of the Second Division of the Merchandise & Retail Business Unit. He is also a director of various subsidiaries of the Company. He joined the Group in December 2008, and was promoted to be a Vice President in March 2018. Mr. Song graduated from North University of China (formerly known as North China Institute of Technology), specialised in Industrial Electrical Automation Technology. He has extensive experience and achievements in strategic planning, sales marketing, product branding and retail operation.
TANG Guoxing, is currently a Vice President of the Group, in charge of the Brand and Channel Development Headquarters. He is also a director of several subsidiaries of the Company. He joined the Group in December 2010, and was promoted to be a Vice President in March 2019. Mr. Tang graduated from Jiangsu Open University (formerly known as Jiangsu Radio and Television University), specialised in Business Enterprise Management. He has extensive experience and achievements in strategic planning, sales marketing, product branding and retail operation.
YIP Wing Ming, is currently the Company Secretary and the Financial Controller of the Company. He is also a director of various subsidiaries of the Company. Mr. Yip joined the Company in February 2017. He holds a first class honours degree of Bachelor of Business Administration in Finance and Economics from The Hong Kong University of Science and Technology. Mr. Yip is a member of the Hong Kong Institute of Certified Public Accountants. Prior to joining the Company, he worked for an international audit firm. Mr. Yip has over ten years of extensive experience in accounting, auditing and financial management.