Distinguished investors, welcome to Topsports International 2024 and 2025 Fiscal Year Annual Results Announcement. I'm Rebecca Zhang, Head of the Capital Markets. Please allow me to introduce the company's management team present today. They are Chairman, Chief Executive Officer, and Executive Director, Mr. Wu Yu; Senior VP, Mr. Zhang Qiang; Vice President, Ms. Zhang Huiiing; Vice President, Mr. Ding Chao. For today's presentation, Mr. Yu will first provide a brief overview of the past fiscal year, and then the management team will report on financial performance and business development, followed by a Q&A session. As usual, I'd like to welcome Mr. Yu to address the floor first, please.
Good morning, all investors and analysts. Welcome to Topsports' Annual Result Announcement. Looking back to the past fiscal year, the weak macroeconomic consumer environment and the soft airflow foot traffic have put significant pressure on the retail industry.
Our overall performance has been largely consistent with what we have communicated to you last October. Despite facing continued challenges and numerous difficulties at the micro level, we have never relaxed our efforts. We are remaining committed in establishing long-term value, exploring new models in which new formats and scenarios, and constantly seeking breakthroughs and transformation. Responding to changes and pursuing certainty have been the key focus of our business operations and development. Connection and integration are the key concepts as we look inward to deepen our omnichannel connectivity in the new environment. Breakthrough limitations and innovation represent our active outward exploration, breaking away from the traditional thinking to seek for long-term development opportunities. Facing this very complex and challenging situation, we must acknowledge the difficulties and the challenges. We are maintaining confidence in our long-term development.
As you can see from our performance data, we have maintained healthy cash flow generation even in adversity, which will support our sustainable development in the near future. At the same time, the past fiscal year also marks the 25th anniversary that Topsports has journeyed along with the Chinese sporting retail industry. Through years of dedication and cultivation, we have established deep connections with more than 5,000 [airline] stores, more than 2,300 mini program stores, and more than 500 TikTok and WeChat mini programs. We have forged a bond with 80 million sports fans, and we continue to further extend our customer base. By continuing to deepen partnerships with the brands, we will be able to provide customers with high-quality products and services across multiple categories and domains. We have already become the exclusive operational partners for several brands in the Chinese market.
We leverage our one-stop operational capabilities to enter into specialized scenarios, meeting consumer personalized needs while exploring incremental business value. While at the same time, since our IPO, we have maintained very healthy business-driven cash flow, achieving an accumulative dividend payout of RMB 12.96 billion, with a cumulative payout ratio of 104.2%, constantly leading the industry. Additionally, our achievements in sustainable development have received high recognition from authoritative global institutions, with our ESG rating leading the whole industry. For the 25 years, we have grown alongside the industry, journeyed with our upstream and downstream partners, resonated with consumers, and thrived with our employees. We continue to deliver healthy and sustainable returns to our shareholders. We continue to evolve as the one-stop omnichannel operational partners for more collaborators across diversified sporting segments in the Chinese market.
Looking ahead to the new year, in an era where changes have become the new normal, we maintain a cautious, optimistic outlook on the market development. The caution is by no means passive conservation, but rather a commitment to maintain clear judgment and a flexible response strategy. We are actively adapting to the new changes and the challenges brought by the evolving landscape, proactively seeking for changes, boldly advancing, and executing with agility. We continue to strengthen our business foundation and explore new value for Topsports in new industrial environments. Now, I will hand over the time to Rebecca to help you review our annual financial performance, please.
Thank you. Thanks to Mr. Yu. Coming next, I will update every month on our financial performance for the fiscal year. The overall performance aligns with what we previously communicated to the market based upon our principle of opening, transparency, and timeliness.
There are a few points. First of all, at the profit and loss level, the worldwide decline in revenue and the net profit was primarily affected by the weak macroeconomic demand and the soft airflow foot traffic. Although our direct-to-consumer online business continued to grow and provide some support, the relatively high fixed-cost structure of the airline operation led to significant negative operational leverage as airflow revenue declined. This had a magnified negative impact on profit compared to the revenue performance. The second point, due to the overall external environment and the self-decline, as been discussed with all of you, the inventory management is going to be the key focus during the fiscal year. Looking at the result through the coordinated efforts of both online and offline channels, we have achieved the expected outcome.
By the fiscal year end, inventory decreased by 4.5% on a worldwide basis and down by [1.29]% compared with the end of August 2024. Inventory turnover days stood at [134.29] days, down by [1.22] days on a worldwide basis, and 30.4 days declined compared with the interim. The total inventory volume has been effectively controlled on a Q-on-Q basis. The overall age structure of inventory remains stable compared with last year. There is still some room for further adjustment. With the clearance of the old commodities and gradual improvement in the new inventory intake, we expect the inventory age structure will continue to be improved. The third point, thanks to the effective inventory management, we still maintain a very robust and efficient working capital management during the period, driving excellent cash generation performance.
Despite a 43.5% one-month decline in profit before tax, our net operating cash flow increased by 20% on a worldwide basis to RMB 3.76 billion. Free cash flow was 2.6 times the net profit for the same period. If you keep a look at our track record, such a ratio is higher than our observed five-year average. Based on that, the board recommended a final dividend of RMB 0.02 per share and a special dividend of RMB 0.12 per share. Combined with the interim dividend, the total annual dividend was RMB 0.28 per share, with a total payout ratio of 135%. This maintained our industry leading position, exceeding our previous fiscal year's payout ratio of [100.29[%. We remain firmly committed to developing sustainable returns to shareholders through robust cash generation. Next, I will elaborate on different criteria in financial performance.
Overall revenue declined by 6.6% to RMB 27.01 billion. H2 saw a worldwide decline of 5.4%, narrower than the [7.29]% drop in H1 of this year. This improvement was particularly evident in retail business performance between the two halves. The retail business declined by [8.29]% in H1 and 4.8% in H2. This improvement was primarily due to our intensified online sales initiative in H2, which had positive effects on both revenue and inventory performance. We are also impacting the discount level and certain expensive items. By brand category, sales revenue for our key brands declined by 6.1% on a worldwide basis to RMB 23.31 billion, while revenue from other brands declined by [9.29]% to RMB 3.5 billion. The performance in the other brands category was mainly affected by casual sports brands.
This is indeed in line with observations of the market, where specialized professional sports brands continue to outperform the comprehensive sports and casual sports category worldwide. At the gross profit margin level, the fiscal year saw an overall worldwide decrease of 3.4 percentage points to 38.4%, which was slightly narrowed down compared with a 3.6 percentage point decline in H1. There are a few reasons. First of all, if you take a look at the left-hand side of the green bracket, this actually shows the average deepening discount rate. This factor has a greater negative impact on gross margin in H2 of the fiscal year compared with the full year. This is also indeed in line with what has been discussed with all of you.
This was primarily because we strengthened inventory reduction efforts in H2 and maintained through online channels as our primary strategy, since the absolute value of the online discount rate is lower than the offline discount rates, with the difference being around 20 % point. The increased proportion of the online sales also had a negative impact on overall discount rates. This impact was greater in the second half, as I mentioned, being further intensified. While at the same time, we also started to see the impact from the inventory provisions and other factors, the company's inventory provision adjustment for the full year was RMB 47 million, where the amount increased worldwide. It narrowed significantly, compared with RMB 90 million inventory provision adjustment in H1 of the fiscal year, which also reflected the effectiveness of our inventory management.
The third point, the negative impact from the changes in sales proportional between the direct-to-consumer and wholesale channels. Looking at the full fiscal year, the impact has already been narrowed down compared with H1 of this year. This may also be directly related to the faster growth of the direct online sales in H2 of the year. Coming next, the next slide will help to walk you through our overall expenses ratio. During the fiscal year, the revenue declined by 6.6%. The total expenses decreased by 5.6%, resulting in a slight 0.3% point, compared with the expenses ratio of 33.1%. In this challenging environment, we mitigated airflow operating expenses pressures through our omnichannel layout and continued to refine cost efficiency management. The key expenses component included three parts: rent, labor, and other expenses. Let's take a look at the rental expenses. The overall estimated rental expenses decreased by 50.7%.
The rental expenses ratio down by 1.3 percentage points, providing the biggest contribution to controlling the overall expenses ratio due to a few reasons. First of all, for the offline network, we made the further optimization, as you can see from the store number changes throughout the full year. While at the same time, we also continue to talk to the property management company of getting more preferred terms. We are working for flexible rental structures. For that reason, I have already shared with you, by continuing to optimize our offline network with flexible rental structure, the total sales area decreased by 12.4% on a worldwide basis. There is another contributing factor for the average decreased rental expenses. That is a ratio change for online and offline. I have already mentioned it to you. Online channel sales continue to go up in this fiscal year.
Generally speaking, for online channel, it has a lower expense ratio, where from the expense composition perspective, the online has a higher proportion of arrival costs, where offline has higher fixed costs. Improving the sales from the online channel will actually help to benefit the overall control of the expenses ratio. Secondly, on the stocking front, we maintain personal configurations along with our omnichannel needs, building an agile and efficient time and supply while securing cost efficiency advantage. Overall headcount decreased by 7.4% on a worldwide basis. Total employee cost down by 6.3%. Existing ratio increased slightly by 0.1 percentage point to reach 10.2%, remaining essentially stable on a worldwide basis. Despite external environmental fluctuations during the period, our overall average employee productivity remained consistent. We also would like to provide long-term development support through quality titans, with average employee costs remaining relatively flat.
Other expenses also showed an upward trend throughout the fiscal year. I'm going to provide you the breakdown one by one. Other expenses increased by 10.2% on a worldwide basis, with H2 showing a faster rate of increase. The full year other expenses ratio increased by 1.5 percentage points. Those expenses primarily include property cost, depreciation of the brands and equipment, e-commerce platform services, and logistics services. During the fiscal year, as I mentioned, the rapid growth in online platform sales, including private domain live streaming, led to a corresponding increase in platform operation and logistics costs. We have kept an eye on the ever-increasing cost for those expenses. It's consistent with the sales growth of the direct online channel during the fiscal year. From the overall expenses ratio perspective, the above analysis breakdown expenses by nature.
However, from a business development perspective, the key negative factor is still the impact of the offline operating negative leverage, which was partially offset by the increased proportion of the online retail business. Looking at the offline expenses alone, the expenses ratio across all major categories increased to varying degrees. Let's also move to the profit or the net profit changes. From the left side, you can see the net profit trend. Further on the left, we see that the main factor affecting the net profit was the decrease in gross profit and the slight impact from other income, where many items, including total expense and the net financing costs and the tax expenses, all provide positive support. Looking at the worldwide changes in factors affecting the net profit margin, the worldwide decrease in GP margin and a slight increase in expenses ratio were negative factors.
Other income remained basically flat. Net financing costs and the tax expenses provided positive support. Yesterday, many of the investors have been asking about the income tax. Actually, income tax is indeed a factor. Income tax decreased by 50% on a worldwide basis, slightly more than the change in profit before tax, contributing 0.9 percentage points positively to net profit, mainly due to the preferential tax rate policies we secured in certain regions in China. Coming next, let me just walk you through the working capital efficiency. During the fiscal year, inventory management was our key focus. We adhered to the principle of maximizing product efficiency, implementing efficient inventory circulation and process management with one inventory across all channels approach. We promote a process investment ecosystem synergy across multiple disciplines. The year-on-year improvement in effective utilization of the online inventory channels has been secured.
Such measures can help us to expand the sales volume and deepen operational efficiency. We have also reached joint shopping strategies along with our brand partners. Through the implemented measures, we can actually ease and steadily improve inventory pressures in the terminal market. Inventory value decreased by 4.5%. Inventory tenure days decreased by [1.22] days, reaching [134.29] days. Looking at the sales and inventory, that is, inventory to sales ratio, it still remained within four to five months, basically consistent with a year-on-year improvement compared to Q2 and Q3 end. Regarding the age structure, due to the clearance of the old product and the brand-conscious approach for new product achievements, new inventory maintained a level of 70%-80%, though slightly decreased worldwide. As we mentioned, inventory structure remained relatively controllable but still has room for further optimization.
Trade receivables decreased by 43.4%, with tenure days decreased by one day to 40.1 days. Trade payables decreased by 11.3%. The tenure days decreased seven days to eight days, mainly related to the revenue decline and the differentiated comparable basis between the two periods. Due to the above factors, the cash conversion cycle increased by 4.8 days, reaching 141 days. During the fiscal year, we reduced working capital by RMB 850 million through excellent fund management, where the changes in inventory, trade payables, and trade receivables resulted in an overall working capital reduction of RMB 770 million, which was a great contribution. We will still be able to maintain very high good efficiencies for that. Let's also move to the cash generation capacities. The key points are, for example, the largest positive contribution and the largest negative factor. The largest contribution comes from operating cash flow performance.
Despite the impact of the profit decline, net cash flow from operating activities was RMB 3.76 billion and 20% worldwide increase, with working capital change providing a positive contribution of RMB 850 million, where you can also see on the right side. This is a negative factor, which came from our dividends. We have constantly provided high and stable dividends to shareholders, with a total dividend accounted for 108% of the beginning cash, where the beginning cash is used for dividends, where the ending cash represents the cash generated from our business operation during the period. Ending cash was RMB 2.59 billion, up by 32%, which still maintains a very solid cash generation capacity. Coming next, I'm going to walk you through our dividends. From the capital allocation philosophy, on the right side of this diagram, you will be able to see the three key components.
First of all, we're still using dividends to support organic business growth. Secondly, we're going to invest in business sale extension opportunities. Thirdly, we will also continue to consider excellent shareholder cash returns. This is a philosophy we maintained for many years. Looking at the actual cash for the fiscal year, after meeting the funding needs of the first two items, we still have substantial cash reserves to support future business growth. During the period, our free cash flow was RMB 3.38 billion, with free cash per share RMB 0.5448. Those increased by 24.1%. Free cash flow was 2.6 times the net profit for the same period, providing a very solid foundation for our dividends. Therefore, the board recommends a final dividend of RMB 0.02 per share and a special dividend of RMB 0.12 per share for this fiscal year.
Combined with the interim dividend, the total annual dividend was RMB 0.28 per share, with a total payout ratio of 135%. This maintains our industry leading position and exceeds our previous fiscal year payout ratio. Using yesterday's HKD to RMB exchange rate and the closing price, the dividend yield is approximately 9%. During the period, despite business operational challenges, our overall cash performance remained strong. Based on that, we hope to continue to create sustained shareholder return value in a volatile market environment. Of course, we make comprehensive considerations, including our confidence in our long-term cash capacity, future development funding requirement, and commitment to long-term sustainable return to our shareholders. Since the company has been listed in 2019, we have achieved cumulative dividend return to shareholders of approximately RMB 12.96 billion, with total dividends accounting for 1.04% of the total net profit.
Our consistent thinking and action has already been reflected in our great performance. Let's conclude the review of our financial performance. I will invite Mr. Zhang to lead us through the business review.
Thank you. Thanks for your backup. We have challenges and opportunities. From our observation of the retail industry, we can understand from the microdata that it remained relatively weak, with total retail sales of the consumer goods growing by 3.5%, lower than the economic growth during the same period. Meanwhile, omnichannel integration, experienced outbreaks, and technology are accelerating the evolution of the overall retail industry against the backdrop of continued pressure for store foot traffic. The gradual move to the integrated online offline operation has become the new normal. Social e-commerce and live streaming channels continue to expand, making omnichannel inventory a must for any companies.
Artificial intelligence provides more possibility to upgrade consumer shopping experience and optimizing business operational efficiency. For consumer behavior, rational decision-making has become dominant. Consumer demands show polarization. On one side, mass markets are becoming price-sensitive. On the other side, self-indulged experience has become the mainstream. Consumers' demands over diversified experience and a specialized sporting lifestyle continue to expand, which develop the niche markets such as trail running, skiing, and tennis. At the same time, consumers also show great likelihood to go for brands with sustainable concepts. In summary, we observed the following characteristics in the retail market of sports. Consumer demand must still be quite cautious. Offline foot traffic is being pressured. With all those factors, there are some pressures for the industrial and inventory turnover. Facing multiple challenges, we constantly focus on our strategic execution, responding to market changes. Overcome difficulties, we remain engaged.
During the fiscal year, we continue to advance the iteration of our omnichannel retail network platform, trending towards more comprehensive, systematic, and flexible directions, always along with the consumer. At the same time, we also make sure we have efficient circulation of goods from all channels, leveraging refined means to well-manage different grades of the product. The execution of the above two actions lays a very solid foundation for our stable cash flow during the year. More importantly, it provides solid support for our sustainable development in the long run. Simultaneously, we break through limitations with innovation, continue to engage in the market, driving consumer experience upgrades in all channels. We explore a diversified cooperation model. Within the period, we join hands with more brands, continue to become their exclusive operational partners in the Chinese market to deepen our ties with them.
It actually helps to diversify our business, also inject new vitalities into business development. We leverage technological innovation, our key driver, leverage the power of technology, support the selling effect of the business. Expansion and efficiency upgrades. In omnichannel retail, we position product management, user service, and the digital intelligence platform as three key supports. Continue to work for online and offline channels with a more comprehensive and systematic and robust operation. We will be able to have full coverage and deep integration of online and offline scenarios against the backdrop of accelerated offline development. The perceptibility, experimental, and touchpoints become more important. Retail stores provide young people with space to connect with beauty and foster empathy. We continue with experience, synergy, efficiency priority. By improving the store structure, scenario integration operates and the local ecosystem activations improve consumer experience.
For online, we focus on enriching scenario and inventory turnover. We actively expand our online channel layout, covering consumer multidimensional needs through multiple scenarios relating our diversified scenario metrics. At the same time, targeting the inventory optimization during the full year, we accelerate turnover by leveraging characteristics of online scenario. For this year, facing the double-digit pressure for the deploy of live foot traffic, we adopted an efficiency-oriented approach in providing lean and focused offline methods. We remain cautious with new openings and renovation, and we also continue to eliminate inefficient stores. We continue to have a select price-optimized principle, having one brand, one strategy, differentiated operation. By combining the differentiated brand characteristics, consumer profile, and product attributes, we create a specialized store with diversified store metrics. We strengthen the sports retail experience upgrades, making store the intersection points for omnichannel traffic and the different sporting life style.
Overall speaking, our offline network is evolving towards a fewer number, more diversified in growth, and more complete experience, and high priority and efficiency. For this fiscal year, following the above approach, we continue to advance store structure optimization. Total number of direct operated stores decreased to 5,020, decreased by 80.3%. The store closures being further accelerated in H2. This is also in line with what we talked to the market. Regarding store openings and renovation, we are more strengthened in selecting the right stores for the right square footage and store efficiency per square meter. During the period, our new store opening mainly focused on flagship stores and the principal brands and the new layout of the professional vertical category brands, emphasizing on overall retail service capacity through the store. Store renovation was centered on improving future store efficiency.
During the year, 258 new stores being established, fewer than average for the past three years, reflecting our cautious attitude for new store opening. For store closure strategy, we combined market conditions with brand strategies to marginally accelerate eliminations of the efficient stores and mitigate negative impact from the sluggish foot traffic from the air fry stores. 1,382 stores being closed, higher than historical average for the past three years. Total sales area decreased by 12.4%. Single-store sales grew by 7.2%, consistent with the same period of last year, but slightly lower than the previous years. This also reflects our one brand, one strategy approach. We deeply recognize the essential foundational role of the physical store in the sports industry, upgrading store with development potentials while refining experimental value. Based on that, we manage store areas seeking ideal matching and balance between experimental value presentations and the store performance.
Offline network has become an integration point of the omnichannel traffic coverage. No longer only rely on traditional offline ways to engage consumers. With ever-evolving growth, we continue to promote sports retail experience upgrades and break down the boundaries between online and offline that accelerate our development according to young people's preference, meeting their duties of functionality plus social interactions. For new store openings, we focus on flagship stores with principal brands, representing a deep range of the multi-category products to meet consumer diversified selection needs. We concentrated on opening new stores for vertical category brands, fulfilling in-depth needs of the consumer, focused on those sentiments. For example, we have sports and recreation, run ecosystem expansion, urban pioneer sports, and trend culture aggregation, working with our best partners to jointly explore new generation store formats.
Within the fiscal year, we innovatively actually launched Adidas Hollow concept store, Future of the Style concept store, Jordan worth of sales flag stores, Hoka brand retail stores focusing on runner settings, and Mountain Climbing concept stores, making our store intersection points for urban culture and sporting lifestyles. At the same time, we also integrated more sustainability concepts into the air fry experience, including collaborating with brands on using the closing collection through our proprietary charitable IP green box. Our Adidas Hollow concept store also received the Leadership in Energy and Environment Design, LEED Gold certification, comprehensively implementing environmental community in building material energy saving system and the construction process, creating quality shopping environment for consumers. We also conveyed the value of sustainable development and the positive healthy sporting lifestyle. For this fiscal year, our overall online business continued to grow rapidly. There are a few reasons.
Combined with online channel characteristics and consumers' high price sensitivity to assist the omnichannel inventory turnover, now we capture the core business opportunity through a broader online channel layout in response to the shifting consumer shopping preference towards omnichannel, which partially offsets the offline foot traffic pressure. Through the two tactical breakthroughs, our most important core achievements in online segments were refining and optimizing our overall metrics approach to online operations based on the characteristics of each online domain. We constructed comprehensive online metrics, including the platform e-commerce and content e-commerce, plus private domain operation. In platform e-commerce, we emphasized on multi-port layout, focusing on store cluster metrics, deepening our approach through product rates and multi-brand advantage. In content e-commerce, we focused on content metrics, driving interest of brands and accelerating audience penetration.
Where in private domain, we focused on user relationship, establishing deep connection with users through community operation and preset settings, extending the depth and breadth of our omnichannel system. From the result, direct-to-consumer online business achieved a double-digit growth. Direct offline online accounted for mid-range to 30%-40% of the overall direct sales. Overall speaking, we further broke down the boundaries between various domains, spanning all platform traffic above the core of the user preference. For online front, we continued to strengthen our e-commerce platform and also actively building the live streaming metrics, integrating content and social elements across Douyin, WeChat channel, and Xiaohongshu to develop content e-commerce. By the end of the fiscal year, we have 500 live streaming accounts, ranking number one in Douyin Sports and Outdoor leaderboard.
In private domain operation sector, we established a complete user ecosystem, stimulating user engagement through online communities, for example, like WeChat Work and One-on-One Community. With complete transactions through our mini program, to date, we have developed more than 2,300 mini program stores and established more than 100,000 WeChat Work groups. Our private domain mini program constantly maintained the top position in Tencent's official ranking of the popular WeChat mini programs in sports and outdoor category. We leveraged our online traffic advantage to empower physical stores, driving foot traffic through local live settings, sports industry, commercial district collaboration, and private domain community. To a great extent, it can also help to offset the decline for the offline foot traffic. Air fry stores continue to play a crucial role as store centers with stronger social attributes. Through our optimized and streamlined store network, we provide consumers with more refined experience.
Overall speaking, in response to fluctuation and customer preference, we have conducted more in-depth explorations and mature iterations of both online and offline channel integration, with more well-matured and systematic iterations being made. That's all for me. Coming next, I'm going to welcome Ms. Zhang Huijing to review our initiatives and achievements for user operation and digital intelligence.
Thank you. Through continued accumulation and development, the Topsports retail base approached 86 million. During the fiscal year, fluctuations in the external environment increased the difficulty of understanding consumer psychologies and enhancing user safety. Facing ongoing bottlenecks in traffic and rising consumer acquisition cost, we built a diversified user value system from the consumer perspective, deepened user strategies, and formed a deep bond with them. Leveraging our omnichannel cross-scenario consumer engagement, we continue to expand our user base. Based on tiered operational strategies, we effectively maximize user lifetime value.
We have built an integrated closed-loop user operation system, using products, content, and membership costs as entry points to continue enriching and refine user value. Whether users are in store or after leaving, we all provide an omnichannel operation mindset, closely matching the characteristics of each stage of user lifecycle to implement preset targeting and efficient conversion. For community activities, we created a good sporting life as our key concept. We continue to enhance user experience values through systematic community operation strategies, including focusing on creating a sense of community belonging, emphasizing brand boundary creation, meeting personalized needs, achieving the guidance and the support of the user experience to commercial value. We conducted regular membership activities like media cross-collection, September Member Month, and the New Month Shopping Festival. We're also working with well-known brands like IP like Little Liu Duck and Patty Huggies.
At the same time, we have our running IP, Top Run Freight, Sports Club IP, Yiran Sports life, and the [Chesterbrook] IP, Bringb ox, as our featured IP. We partnered with brand partners to host NBA Star Fan Interaction Event at Topsports stores, using innovative and diversified marketing approaches to achieve high-frequency interactions with young consumers, enriching sports plus diversified combinations and enriching brand reputation. At the same time, through diversified marketing and offline community experience activities, we deeply optimized user experience, stabilized user scale, and enhanced user loyalty. The results show that we have achieved solid repeat consumer performance, effective maintenance of the high-value user. First of all, high membership consumption contribution. Members contributed to 93.2% of the in-store retail sales, constantly maintaining high and stable sales contribution.
Repeat member accounted for 70% of overall member consumption, with very stable performance, highlighting the effectiveness of the high-value members. Our cultivation of the high-value member has yielded positive feedback. Though high-value members represent only a mid- and single-digit percentage of the total consuming power, they contribute to nearly 40% of the sales from the total consuming members. The average transaction value is also significantly higher than overall membership, with consumption potential and loyalty standing out compared with ordinary members. During the fiscal year, with the flourishing development of technology and widespread adoption of artificial intelligence, it also supported our retail development. We promoted digital intelligence on precision plus efficiency, starting from people, products, to places, with omnichannel retail business moving towards user connectivity, angel efficiency, and cross-border integration.
Through the omnichannel user touchpoint, combined with practical needs of the core business, we drove platform capacity upgrades through technology empowerment to achieve sales expansion and cost reduction with efficiency improvement. At the value level, we promote the interconnections of the cross-platform member data, which successfully achieved a near nine-fold worldwide growth in incremental members on new platforms, extending our user base. At the same time, through preset user matching, including expanding diversified sales channels like Discord and paid vouchers, we achieved a 50% worldwide increase in per capita consumption during New Year's Shopping Festival. At the product level, the GFV generated under the intelligent recommendation system was four times higher than ordinary recommendation. Product information added in efficiency also greatly improved after product mid-platform upgrades, with 50% of the expansion in database of product quantity. They are very solid foundations for angel product distribution across multiple scenarios.
Last but not least, at the venue line, we actively explore new business scenarios like top-out team or ecosystem and mid-month flat shopping. Upgrade online scenarios. We upgraded mini program more, achieved a 70% increase for purchase conversion rate and a 20% increase for average user visit duration. Additionally, we also conducted more application and exploration of artificial intelligence tools in omnichannel retail ecosystem, achieving preliminary results. Our self-developed Dolphin AI has partially implemented integrated applications of our full scenario workflow. After the product intelligent recommendation functions went online, it drove nearly RMB 100 million sales, accounting for 10% of the private domain total sales. Intelligent content generation covered 40% of the private domain market copy creation, improving content production efficiency. Automation transformation of the backend process resulted in the time consumption down by 50%, with released resources being reallocated to value segments that create more value.
That concludes user operation and technology empowerment. Coming next, I will welcome Mr. Ding to share with us long-term layout and future strategy.
Thank you. With the macroeconomic environment and the international situation, the consumer industry started to have more opportunities. Where Generation Z and the new middle class deeply bind sports consumption with self-realization, leveraging our multi-category layout, we continue to expand our product metrics, including the comprehensive sports, casual sports, professional sports, and IP culture. We're committed to becoming the omnichannel one-stop operational partners for more collaborators across diversified sporting segments in the Chinese market. Through deeper retail operating capacity, broader scenario coverage, and diversified integration and more comprehensive user base, by the end of this fiscal year, we've established deep cooperation with more than 20 brands, jointly exploring market opportunities.
Within the fiscal year, through exclusive market operation and planning, we continue to further extend our coverage and be able to cover a broad category space. We have precisely matched user consumption needs, explored diverse cooperation models, enriching our operational chain and achieving comprehensive coverage of differentiated consumer groups. In running market, with expansion of the group size and upgraded professional needs, modern runners are within high requirements for high-performance personalized and aesthetic design with value satisfaction in equipment. We can capture the development opportunity, introducing high-end running brands, store running to Chinese market as exclusive operational partners in China. Taking full responsibility for its development in China market, store running with pioneering design, the innovative technology material as core highlights provide professional sports equipment that combines functional design with special aesthetics in global runners. Moving forward, it will help to meet Chinese consumer needs.
Additionally, our cooperation with medium five-year trial running brands, Nuda, can actually continue to deepen, and now it already has a flexible in Xiaohongshu and also moved into another city, including Shanghai and Beijing, fully capturing development opportunities in trial running each segment. In outdoor verticals, we now started to reach cooperation with Norrona as a central primary outdoor brand from Nordic regions. As exclusive operational partners in China market, we'll work with Nuda, exploring the potential of the outdoor market. Moving forward, we're going to have omnichannel operation plus preset targeting, open practical stores online, and build private domains, leveraging the brand activities to influence more consumers. We will also share the latest progress with investors in the near future. In 2025, with the strong promotion of the national strategy to expand domestic demand and promote consumption, the consumer market is very likely to welcome multiple policies.
However, the trend has been accelerated, and the fragmentation of the consumption scenarios significantly shortened product cycles, which challenged retail companies a lot. Facing the challenges, we never underestimate difficulties, nor our strengths. We will continue to refine our competitiveness with forward-looking strategies and continue to create long-lasting value for consumers, shareholders, partners, and society. Looking into the next fiscal year, our business will still focus on the following four points, focusing on omnichannel retail user innovative business models and services for long-term growth. Continue to focus on consolidating efficiency, forging the fundamental resilience of the retail business. Third, optimize and improve preset efficient digital empowerment. Fourthly, actively practice ESG concept, building a sustainable path through ecological co-constructions and value win-win. We have already shared with you what has been achieved within this fiscal year. I will ask Rebecca to help to share our ESG initiative piece.
In the sustainable development, with a vision of becoming a promoter and leader of green consumption through sustainable ecosystem co-construction and value win-win, we actively fulfill our responsibility. During the fiscal year, in response to the United Nations Sustainable Development Goals and the Dual Carbon Strategy of China, we have motivated our 10-year carbon reduction target, conducted our first greenhouse gas Scope 3 inventories. Additionally, Topsports Store received Leadership in Energy and Environmental Design Gold certification for the first time, making another advancement in green retail. We have created charitable IP, Green Box, in retail store scenarios to convey sustainable development value and a positive, healthy sporting lifestyle to consumers. In terms of the governance and responsibility, we achieved an employee training coverage ratio of more than 95% and 100% signing rate with the suppliers' integrity agreement.
All those achievements reflected our continued progress towards new heights in sustainable development. Based upon our strategy and the multiple actions being taken during the fiscal year, our MSCI ESG rating jumped two levels, which is double-A, leading consumer goods industry in China. Key areas include privacy, data security, commercial safety, and corporate governance, all made significant progress, reaching industry leading levels. This achievement marks the high recognition from authoritative institutions for our continued investment in ESG. In the future, we will continue to promote green coordination and integration across omnichannel retail scenarios, guided by our own development strategy, driving upstream and downstream to practice ESG, working with stakeholders to build a sustainable development ecosystem. This concludes our closed remarks. Coming next, we will move into the Q&A session. We'll welcome online investors to raise your questions and talk with the management team.
Right before you raise your question, please identify yourself, and please make sure you raise by no more than three questions. Now, we're going to open the floor for Q&A. Please help to provide your name and the institution you represent. You select to raise a question. Please press star and number one to raise your question. After hearing the sound, you can start to raise a question. We shall go from Citibank, please.
Thank you very much. Can all of you hear me?
Yes, please.
Okay. Thank you very much. Thanks for the management team for your detailed introduction. I have three questions. My first question is regarding brands, especially on slide 28. I see the number of the brands you are working with. I actually help to compare the descriptions you have over the brand partners since IPO. You can see that you do have many vertical brand partners.
Besides [PandaScore], and you also have Norrøna and SOAR. Those are indeed the very much vertical category brands, which can only be purchased in overseas countries in the past. Mr. Ding also mentioned you have some strategic considerations for that. I'd like to ask you, you used to have one to two key brands as your brand metrics, but now you have a very complicated brand metrics. Then, what would be your mid and long-term strategy? Do you have any implications on financials by having such a diversified brand metrics? My second question was to your two key brands. In September and October last year, the company has been quite forward-looking in de-inventory yourself. In other words, you become less passive for the market macros.
By taking a look at the two key brands in China, the demand is still uncertain due to tariff reason, but from the supply perspective, I believe the industry inventory was on the downtrend, so there will be less negative factor from the supply side. For the two key brands, I do see there are many uncertainties for demand. I'd like to ask you, after talking with the two key brands recently, how are those brands going to comment on their practice in China market? Even the product launch in the next few months, or how they're going to continue to build up brands in China and how they're going to support the retailers of their brand's product. My third question is regarding the dividend payout ratio. I'm not going to ask too much on financials. I think you made a very clear narrative of the financials.
Your dividend payout ratio is reaching 135%, but due to the uncertainties of the future, can I take 135% dividend payout ratio as a base to focus what the future dividend payout ratio might be? Thank you.
Thanks for Mr. Wei. Let me help to answer the first question regarding new brand development. Three points to help me to further respond to that. You see that once we will be IPOed, I have already shared with you, we are representing the sportswear consumption market in China. If you keep a look at the product metrics, just like the investment portfolio all of you are building, what we do is to try to showcase the change in demand of the Chinese market. We always keep an eye on the changes of the Chinese market and ever-changing consumption needs in China.
As I have already mentioned, no matter for the outdoor or the running, both verticals are performing very well in the Chinese market. That's the reason we will be very proactive in engaging more brands to take care of the consumption needs. From the consumer perspective, how are we going to further integrate the relationship between us and the consumers? No matter if we're eager to serve our consumers or even forge a deep bond with a consumer, what we have to do is to have a deep connection with our consumers. For our brand metrics, for consumers themselves, no matter for their age groups or the market changes, the consumer needs continue to be differentiated. We also continue to see the ever-changing landscape of the market also be able to capture the ever-changing consumer needs. You can take a metaphor.
If we're the educational institution, we used to be a middle school, but in the near future, we hope we could be a K-12 school, covering from kindergarten to university, so that we can travel with our consumers to every stage of their lives. More recently, we introduced many brands, especially starting from Nuda. We continue to explore new business ways, starting from traditional distributors to the regional exclusive partners. In other words, we are taking more responsibilities on the value chain with more roles being commissioned and with more tasks being performed, which will also continue to have a profound impact on our GP margin and our profile. This is one breakthrough we made from the business perspective. Thank you.
Okay. Let me help to answer your second question.
After talking with the key brands, we truly feel the position of the Chinese market and all the key brands remain committed to the Chinese market for further investment. China is still indeed one of the most important markets, globally speaking. With such commitment, we also see the ever-changing product landscape. There is one thing you have to be alerted. The fundamental change of the product really takes time and has to go through the circle. Until now, supportive initiatives from brands to distributors are pretty stable. Thank you.
Thank you, Mr. Wei, for your question regarding dividend payout ratio. On slide 13, we have already provided you the philosophy of dividend payout ratio. First of all, we're going to use the dividend payout to help to further support our sustained business growth.
For this fiscal year, even if the profit has been pressured, our overall cash performance has been quite strong, especially the free cash flow to net profit was 2.6 times. It used to be 1.2 times last year. Also, for the past five years, the average, I mean, excluding the 2024- 2025 fiscal year, the free cash flow to net profit ratio used to be 2, but for this year, it's already 2.6 times. The reason is because indeed the company registered a very solid performance for cash. We also hope that we will be able to leverage the payout ratio or cash dividend as a way to pay back the shareholders with sustainable returns. The company attaches great importance to the return to the shareholders.
Where, of course, according to what was happening for the past five years, you can also clearly see the five-year average dividend payout ratio in history was 105%, which is indeed ahead of the industrial average. The company has been quite committed for the shareholder returns. It is always above the industrial average. Thank you.
Thank you. I hope you can further improve the dividend payout ratio. No more questions from me. Thank you.
Coming next, let's welcome Lucy Yu from Bank of America.
Thanks. Hello, management team. I'm Lucy from Bank of America. I have three questions. My first question. Indeed, in a very challenging fiscal year, the company rolled out many actions and initiatives. Can you provide us the guidelines for 2026?
I do notice retail industry is hard to be predicted, but at least the growth of the e-commerce or the margin, do you have any overarching guidelines to the market? My second question. E-commerce accounted for more than 10% of your overall revenue. Can you help us to work through the e-commerce, including its rental fees and also logistics? From the operating profit or from the net profit perspective, what's the difference between online and offline business? My final question, that is, is the effective tax rate? Just now, Rebecca has already explained why in 2025 the effective tax rate was very low. Is it a one-time thing, or is it going to happen after this year? Thank you.
Thank you. Thanks for Lucy. Let me help to respond to the two questions you raised before.
The first question, that is around e-commerce, specifically operating profit, GP margin, and profitability difference for online and offline. Let me just take the previous fiscal year as a case to share with you. As I have already mentioned in the prepared remarks, in H2 of last year, we do take some de-inventory actions for online channel. What we do is an adjusted approach based upon inventories and market trends. We will not be able to take what was happening in 2025 as a guideline or baseline for future outlook. Go back to fiscal year 2024 - 2025, at least for the online and offline channel, operating profit still sees growth for online channel.
For offline channel, as I was talking about the expenses ratio, the operating negative leverage for offline channel has been quite severe, especially we do see a double-digit decrease for the foot traffic for the offline channel. For 2025 fiscal year only, the online profit performance is better than what we see from the offline channel. GP margin registers difference. For GP margin, outside GP margin, outside GP margin, for online expenses, it was less, especially fixed cost for online business. It's even lower than what we have for the online channel. In fiscal year 2025, the online channel operating profit is better than the offline channel. You also asked about the question on effective rate. As I have already shared with you, we secured many tax incentives and preferential treatment in certain regions in China.
Some of them will be sustained in the near future. Looking into the longer run, the preferential tax policy continued to change from the COVID-19 to now. There are some supportive policies being made, but sometimes the policy has been discontinued in certain regions. Looking to the near future, I'm not going to suggest to you of using the effective tax rate of the current fiscal year as a benchmark for future assumptions. The existing effective rate is around 8%. Right before the previous interim performance, I have already shared with you in the next two to three years, the effective rate would be around 20%. Effective tax rate would be around low 20s. That would be taken as a reference. Thank you.
Thank you, Lucy. Do you still have more questions?
Let me help to respond to the first question made by Lucy, that is a full year outlook. For the new fiscal year, what's the cautious and positive? In the new fiscal year, we're going to focus on efficiency and profit first. We're not going to have the so-called increasing revenue but decreasing the profit. That is not going to be our strategy. The overall market environment is not positive yet. We're working quite cautiously. We took multiple actions for cost initiative to continue to improve our cash flow. Our target is that we're going to have a flat growth of the net profit. The net profit rate needs to be improved.
Thank you.
Thanks for Lucy.
Very clear. Thanks for the management team.
Next question. Let's welcome Pei Jing from Shenwan Hongyuan Securities, please.
Thank you. I'm Liu Pei from Shenwan Hongyuan Securities.
I have a few questions. First question is regarding your inventory and the discount. As you have already mentioned about the inventory clearance action meeting expectation. I would like to ask about you, what would be the discount trend and the performance of the retail industry? The second question for the brand partners, for example, Nike, did they provide additional support to you in the new fiscal year? What would be the implemented actions? For example, the support you received compared with COVID-19 period and the Xinjiang cotton period. What about the existing support from those large brands? For my final question, you have contracted many new brands. What about their revenue and profit contribution now? How are you going to make your operations and channel ready for those new brands? Thank you.
Thank you. You were asking about a few questions.
For the latest updates, the consumption trends of the new year are almost the same as what we saw in Q4 last fiscal year. We have two observations. The market, overall speaking, is performing good. I do not see the further detailed realization in the market. From the product perspective, some of the brand companies have been cautious in shipping new products. They will also be very cautious in placing the order. For new product supply, it was on decline on year-over-year and month-over-month basis. The new product itself was performing very well. For this year, our overall inventory could be well controlled, conversions being well maintained, and the discount rate is still being pressured. First of all, we have less new product. In our overall sales, we have less new product. For the online sales, the online sales also see nice improvement on year-over-year basis.
That's the performance updates. Second question, support from Nike. Nike always provides us very stable support. The same as being stated by the new CEO of Nike. Until now, I didn't see too much changes on the support from Nike. Thank you. Thanks for keeping an eye on the new brands. Your question actually asked about a few new brands we were being contracted. Those are the new brands just getting to the Chinese market. They're still in the infancy stage. They won't be able to contribute too much of the revenue or profit. We were going to keep all the investors updated with new sales contributions from the new brands. Secondly, you talk about the channel development. The majority of the new brands we engaged, from the business nature perspective, they are different from the brands we used to work with.
We all become the exclusive partners for their Chinese business, starting from brand building to marketing strategies to content generations to retail and to consumer touchpoint. In other words, we're going to use long-term practice to help to nurture the new brands, to help to nurture the consumers for those new brands, continue to further expand the foundation of the business. Where on the other side, we have flexible and agile tools and ways of engaging the market. To be specific on the channel strategy and the future outlook, as I have already shared with you, we do have the so-called one strategy, one brand, one strategy. As we have already shared with you, we are actually working with a new brand, Mirola. Its product line and brand readiness are being well established. We have already shared with the market.
is going to have the stores ready, along with the flagship store online. For other brands, we are going to keep an eye on their existing progress and development and finding the right approach for them to further improve their channel presence. In the short run, they may have a single store online offline, or they may have some online stores with the flagship stores in the offline channel for the market presence. Going back to what I mentioned before, for all those brands, we are being quite consolidated. We nurture the market and help to incubate those brands. I believe they are still going to have a very promising future. We are also going to update the market and any of the new progress we made on the new brands.
Thank you.
Coming next, let's welcome Sun Yue from UBS.
Thank you. Thanks for the management team.
I'm Sun Yuan from UBS. My first question, I'd like to ask, if you have a normalized inventory and discount, then how are you going to comment on GP margin and net profit rate? Were it being restored to 2023 to 2024 level? Because from the structure perspective, probably the online growth is due to structural reasons. The GP margin won't be able to go back to the fiscal year 2023 or 2024 level. Going back to the profit level, I think the market now is in the deepened discount for inventory clearance stage. After the stage is gone, what's going to happen in the near future? Whether the GP margin and net profit could be back to the same level as what we see in fiscal year 2023 and 2024. My second question, you are working with some new brands.
Many of them are vertical category brands, including the running brands and the outdoor brands. Do you believe outdoor sports are going to be a sustained sector? What kind of criteria did you use in order to make the conclusion? My third question, we are very much thrilled to see our operating cash flow accounted for 2.6 times the net profit. Can you help us to break down why we have such a strong operating cash flow? I did not notice the elaboration from your financial report. Thank you.
Thank you. Thanks for Sun Yue . Let me just respond to the questions regarding the financial report. First of all, on the slide, we have a dedicated section for cash flow that is on slide 12. The cash flow chart, we have already provided the breakdown of the operating cash along with the changes in the history.
You can see operating cash flow grew by 20%, reaching RMB 3.76 billion. There are two great contributors for the improving operating cash. The first one is RMB 3.25 billion before the operating cash changes. The CPR World operating cash change was around RMB 850 million. The operating cash change is still a very positive contributor to our ever-improving operating cash position. Going back to the question, I mean, the second question, you asked about the reference number. Let me see, the markets are changing all the time. You may have a deep lesson from that. First of all, the micro-environment is changing, and the retail demand continues to change. Consumer consumption also has been changed. Many of the consumers, they do not simply just go for online channels. Many of the consumers, they still would like to dive deep into the value.
For Topsports, no matter for online and offline, as Mr. Zhang Qiang has already elaborated those initiatives with all of you. Overall speaking, we believe consumer behavior also started to see the corresponding changes as the market change. It is not 100% the same as online business change. We do see the microeconomic changes, consumer behavior change, and also inventory change. For the past fiscal year, the discount impact is even larger than what we used to see in the previous fiscal years. In phase two of the fiscal year, we continue to step up our effort for inventory clearance. We also leverage the channel features to continue to de-inventory the business. For online channel, by then, it is probably the best option for us to de-inventory in the fastest approach.
In other words, for Topsports, we always keep an eye on market environment, consumer changes, and inventories. Then we take opportunities to make sure we stay healthy. At the same time, we will also keep an eye on the overall operational efficiency and the cash flow as a key criteria to support our future business. It is a dynamic process. We hope that we will be able to continue to grasp the good opportunities along the journey so that we will be able to further drive the business growth and continue to improve the performance of the cash flows and continue to deliver good returns to the shareholders. Thank you. You also asked the question regarding the vertical category brands. A few points I can share with you.
First of all, with the overall industrial landscape, we do notice the vertical category brands are going to have a very good growth. There are two reasons. First of all, the consumer behavior or consumer preference started to go for more niche market and be more professional. At the same time, between different verticals, there might be some rotational trends. For sure, we are still very positive for the long-term growth of the outdoor sports. I'm not going to elaborate it here, and we can talk in the near future. I also mentioned about the trend. No matter how the sporting trends may change, the foundation has already been well established. On the other side, for outdoor sports, you really want to know whether there's any bubble there. Where does this bubble might be? What are those consumers?
What are those brands or products actually making money out of the outdoor sports? Or what are those brands that are the non-core brands in outdoor sports segment? According to the secondary market, it is actually reversed mean. Reversed mean was going to bounce to the average, but also be bounced above the average. In other words, for outdoor sports, we are still very positive on that. You asked about whether there is going to be any bubbles or any peripheral changes. Maybe there will be. If only the change, the demand grows for the outdoor sports segment. Thank you.
Thank you. Thanks for the nice response.
Due to time reason, ladies and gentlemen, we now allow the final question. We would like to welcome Ding Shijie from Guosen Securities, please.
Thank you. Thanks for the management team. Ding Shijie from Guosen Securities, I have three questions to the company.
My first question, according to your latest performance or the business updates, I do notice your online platforms being performing very well, especially you have many incremental growth from TikTok or Douyin. I would like to ask the management team, is there any advantage for you to operate your business on Douyin? What about the profitability from the Douyin platform? My second question, we have already observed there are some media coverage said Nike is going to increase price for certain products. Whether that is going to impact or hurt your operation. My third question, the management team has already mentioned the net profit go up. What are those drivers? For example, the discount for offline business or your online self-contribution or other structural factors why the net profit will go up. Is there any brand who is going to provide supportive measures to ever improve the profit you can make?
Thank you. Thank you. Let me hop to answer your questions. First of all, our operation on Douyin. On Douyin, we do have our featured operation. We're just leveraging the live streaming account as a metric for operation. We do have our headquarter live streaming account and a live streaming room to sell the product. We also have the featured account. That is our offline store. For example, for Shanghai IFC Jordan store, besides having the physical store, we also have a live streaming store within the physical store. People can actually watch the oriental pair from our live streaming room. We have a very good hybrid of the online plus the offline store, which can boost the consumer confidence. For the online channel, people may just worry whether I bought the authentic product or whether the store is going to be dismissed after a few months.
Actually, the live streaming in physical store can boost the consumer confidence for that. This can help to further improve the sales of our physical stores. Two features: we have the live streaming account metrics, but at the same time, we also have the live streaming in the physical store. Those are the two approaches that can help us to register good performance on Douyin. The second question was regarding the price up by certain brands. I think you must have heard about this news when the tariff intentions have been in peak. Let me just tell you, the tariff disputes have even not yet been 100% resolved, but they are still in a relatively silent stage. I have to say for Topsports, all of our businesses are within China, and we are working with Nike China for transactions and for operations.
Majority of the China products are actually being produced in China or in Southeast Asia countries. The product is immune from the tariff disputes. Even till now, we do not see any price up for Nike products. Overall speaking, our business is within China. I have to tell you, for tariffs, it was actually impacting products made in other countries. To U.S., it will generate tariffs. In our existing product portfolio, we do not have any made in U.S. Nike product. Thank you. Let me hop to respond to the question regarding driver for profit rate improvement. A few points from me. I think you have already asked about this. From the GP margin perspective, as Rebecca was talking about economic trends, we find out the industry is still in deep promotion. We will be quite cautious in placing the orders.
For some of the brand partners, they control the shipment of the new product, which will for sure impact the inventory age because less for the new product. Inventory structure has been very stable, but still can be improved in the near future. With the order of the new products continuing to be well adjusted, there will be some positive signs. According to our existing observation, I see the online business growth is still good. That is at least from what we observed from the market. For GP margin factor, the key is still on the discount. For the company, we still reserve positive renown conservative for the GP margin. Another contributing factor is coming from expenses rate. For the company, we have a very tight expenses control, especially given the previous fiscal year, we take more cost initiatives.
In that way, we also continue to optimize the channel structure. I have already mentioned expenses ratio for online is lower than offline channel. The fixed cost for online channel is much lower than the offline channel. Those are going to be the two key drivers to improve the GP margin. The company, overall speaking, were quite conservative on GP margin. Expenses rate would be the key contributor to further improve the overall margin of the company.
Thank you. Very clear.
Okay. Thanks for all the investors to stay online for the prepared remarks and the Q&A. Thanks for keeping an eye on Topsports. In the near future, our IR team and our management team will be happy to share our insights with you in the roadshows and the broker summit. Thank you very much. Thanks for joining us here today.