GF Securities: Overall revenue growth in Q4 has slowed slightly, with varying profitability performance in overseas sports shoes and clothing.

GF SEC published a research report stating that although the overseas footwear and apparel companies' revenue growth rate in 25Q4 decreased compared to the previous quarter and inventory-to-sales ratio increased, considering the clarification of the US tariff policy, brand customers are expected to return to normal ordering pace. The leading sportswear OEM company is expected to improve its performance in 26, as it is a big year for sports with events such as the Winter Olympics, Men's World Cup, and Asian Games expected to drive sales for overseas footwear and apparel companies and stimulate demand for orders for the leading sportswear OEM companies. In the long term, the sports footwear and apparel industry has a large market space, high prosperity, strong competitiveness, and the leading companies in the sportswear OEM industry have a wide moat and global production capacity layout capabilities. Downstream customers have excellent quality, and long-term performance is expected to maintain steady growth. GF SEC's main points are as follows: In 25Q4, overall revenue growth of overseas footwear and apparel companies slightly decreased compared to 25Q3. Brands focusing on niche markets such as running and outdoor maintained high revenue growth rates, with profit margins showing differentiation and most companies experiencing cost increases. According to the financial reports of various companies, (1) in 25Q4, brands like On, Asics, Decathlon outdoor, which focus on running and outdoor niche markets, maintained high revenue growth rates. Apart from brands like Under Armour, Nike, Columbia outdoor, and Puma, most overseas sports footwear and apparel companies maintained positive revenue growth. (2) By region: In 25Q4, the revenue growth rates of overseas sports footwear and apparel companies in North America, EMEA/European region, and Greater China region were -3%, -1%, and 2% respectively, with growth rates remaining steady, declining, and improving respectively; (3) By category: Clothing sales showed more resilience in 25Q4 (continuing the momentum from 25Q3); (4) Profitability: In 25Q4, the gross profit margins of brands like On, Asics, Adidas, Columbia outdoor, and VF increased year-on-year, while the rest decreased; operating expenses of brands like On, Decathlon outdoor, Adidas, Asics, and VF decreased, while others increased. In 25Q4, the inventory-to-sales ratio of most overseas sports footwear and apparel companies increased compared to the previous quarter, but overall inventory levels remain manageable. According to Wind, in October-December 25, the inventory-to-sales ratios of US apparel retailers were 2.42/2.02/1.30, and wholesalers were 2.03/1.92/2.01, fluctuating but returning to pre-pandemic levels in 2019. According to Bloomberg, in 25Q4, due to a weak consumption environment, the inventory-to-sales ratios of most overseas brands increased compared to the previous quarter. However, as of 25Q4, except for Under Armour, Nike, Puma, and Columbia outdoor, the inventory-to-sales ratios of other representative overseas sports footwear and apparel companies remained below the historical 80th percentile, indicating that the industry's inventory is still manageable. Compared to FY25, Under Armour, Puma, and Columbia outdoor are expected to accelerate revenue growth in FY26. According to various company financial reports, Under Armour, Puma, and Columbia outdoor are expected to increase their revenue growth rate for FY26 compared to FY25, while Decathlon outdoor, Adidas, On, Asics, and Lululemon are expected to slow down their revenue growth rate for FY26 compared to FY25. Nike and VF have not disclosed their FY26 revenue guidance. Risk warning: Risks related to macroeconomic fluctuations, global supply chain tensions, and rising labor costs.