Nike and Adidas still account for nearly 90% of revenue, and the results of Topsports’ transformation have yet to materialize.

``` Taobo’s performance recovery is still only halfway there. For the fiscal year ending February 28, 2026, Taobo’s revenue decreased by 4.7% year-on-year to 25.74 billion yuan. The company still faces declining offline traffic, weak consumer spending, and fluctuations among key clients, but through store closures, cost control, comprehensive online operations, and inventory turnover, the impact of declining revenue on profits has been somewhat contained. In fiscal year 2026, Taobo’s gross profit margin fell from 38.4% to 38.0%. However, its operating profit margin held steady at 5.9%, and shareholder profit margin actually rose slightly from 4.8% to 4.9%. However, stabilizing the income statement does not mean the growth issue has been resolved. Taobo’s fundamentals still rely heavily on Nike and Adidas. Revenue from “core brands” (Nike and Adidas) was 22.33 billion yuan, down 4.2% year-on-year; but since other brands’ revenue declined even more, the share of core brands actually rose by 0.4 percentage points to 86.7%. This structure has two sides. The upside is that Nike and Adidas still provide the most stable revenue base. For a sports retailer like Taobo, the product appeal, user mindshare, and channel resources of top brands are difficult to be replaced by smaller brands in the short term. On the other hand, Taobo’s performance flexibility is also closely tied to its major clients’ cycles. As long as Nike and Adidas’ growth in the Chinese market is not sufficiently restored, it is hard for Taobo’s revenue side to be truly unburdened. This is also why Taobo has continually adjusted its channel structure in recent years. In fiscal year 2026, the company’s retail business revenue decreased by 2.7% year-on-year, and wholesale business revenue decreased by 16.6% year-on-year. The decline in wholesale was much steeper, indicating Taobo continues to shift resources towards directly operated retail and comprehensive operations. By the end of February 2026, Taobo had 4,360 self-operated stores, down 660 from the previous fiscal year’s 5,020, a decrease of about 13.1%. The previous fiscal year experienced a net reduction of 1,124 stores; store closures slowed down this year. Total retail space decreased by 9.7% year-on-year, but the average sales area per store increased by 3.9% year-on-year. Taobo said in its financial report that both new stores and renovated stores performed better than the same period last year; the overall loss reduction effect from store closures also improved over last year, and capital expenditure fell by 24% year-on-year. Although offline traffic is declining, a store’s value is no longer determined solely by natural walk-ins. For today’s Taobo, its stores are not only sales terminals but also local fulfillment warehouses, community activity hubs, content conversion portals, and brand experience spaces. Currently, Taobo uses the model of “one offline store + multiple online scenario deployments,” so that stores take on functions such as public domain customer acquisition, private domain customer retention, instant fulfillment, and content marketing. These capabilities also lay the foundation for Taobo to operate more segmented sports brands. In 2025, Taobo launched its first ektos running lifestyle concept store in Shanghai. The store is based on multi-brand retail and integrates running culture event spaces and community connection functions. Within the year, ektos participated in marathon expos, hosted trail running pop-ups, and regularly held running group and community events, continuously penetrating core runner circles. Currently, Taobo has become the exclusive operating partner for brands like Norrøna, norda®, Soar, and Ciele in the Chinese market, handling brand strategy positioning, localized content creation, comprehensive retail implementation, and sports community development. Whether these initiatives can truly break into new circles will determine whether Taobo can move from being a major client’s distributor to becoming an entry point for more sports brands entering the Chinese market. Risk Warning and Disclaimer The market involves risks and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Investing accordingly is at your own risk. ```