Pou Sheng International (Holdings) Limited Issues Significant Profit Warning for FY2025

Key Points from the Profit Warning Announcement

• Pou Sheng International (Holdings) Limited (“Pou Sheng” or “the Group”) expects a sharp decline in profit attributable to owners for the year ended 31 December 2025.
• Profit is anticipated to drop by approximately 57.1% compared to the previous financial year.
• Revenue is expected to fall by around 7.2% year-on-year, reaching RMB17,132 million.
• The Group forecasts profit attributable to owners of RMB211 million for FY2025, a substantial reduction from FY2024.
• The announcement is made under Rules 13.09 and Part XIVA of the SFO, indicating it contains potentially price-sensitive information.

Factors Impacting Performance

• Operational Deleverage: The Group experienced significant operational deleverage as a result of aggressive industry-wide discounting and declining sales.
• Subdued Consumer Confidence: Weak consumer sentiment in mainland China, coupled with elevated industry inventory levels, led to intense promotional activities that pressured Pou Sheng’s top-line performance.
• Retail Store Slowdown: Retail stores suffered from persistent weakness in foot traffic and a mid-teens percentage decline in same-store sales.
• Sub-distributor Channels: Lower-tier cities saw sluggish foot traffic, severely impacting sub-distributor channel performance.
• Online Business Resilience: Despite the challenges, Pou Sheng’s online sales maintained solid momentum as the Group continued enhancing its omni-channel capabilities and digital presence in China’s competitive sportswear e-commerce landscape. This partly offset weak physical store performance.

Management Actions and Financial Position

• The Group implemented rigorous inventory management, mix optimization, digital capability enhancements, stringent expense controls, and organizational adjustments.
• Despite these efforts, profitability was significantly constrained due to ongoing discount pressures and sales declines.
• Pou Sheng maintained a solid cash position through disciplined channel planning and inventory management strategies.
• In January 2026, the Company conducted a series of share repurchases, signaling management’s confidence in the Group’s long-term prospects and intrinsic value amidst market volatility.

Important Shareholder Information

• The information disclosed is based on preliminary unaudited management accounts and has not been reviewed or audited by the independent auditor.
• Actual financial results may differ from this announcement. Shareholders and investors should refer to the audited consolidated results to be released on 11 March 2026.
• Investors are advised to exercise caution when dealing in the shares of the Company.

Board and Management

• Chairman: Chiu, Hui-Yao
• Chief Executive Officer: Chang, Su-Ching
• Chief Financial Officer: Chen, Li-Chieh
• Non-Executive Directors: Tsai Patty, Pei Chun; Li I-nan
• Independent Non-Executive Directors: Chen, Huan-Chung; Feng Lei Ming; Liu, Hsi-Liang

Potential Impact on Share Price

The scale of the profit decline and revenue contraction, combined with operational challenges and aggressive discounting in the industry, are likely to be highly price sensitive. The announcement of a 57.1% profit drop could dampen investor sentiment and exert downward pressure on the Company’s share price, especially given the uncertain economic backdrop and the competitive retail environment in mainland China.

The Company’s share repurchase actions may partially offset negative sentiment, signaling management’s belief in long-term value, but the warning remains a major concern for investors.

Disclaimer

This article is intended for informational purposes only and should not be construed as investment advice. All financial figures are based on preliminary unaudited management accounts and may change upon auditing. Investors are strongly advised to exercise caution and consult the Company’s official announcements and audited financial statements before making any investment decisions.

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