GF SEC: The brand retail industry shows steady growth while the OEM industry faces pressure.

GF SEC released a research report stating that in the short term, the second half of 2026 will have a lower baseline compared to the same period last year, and coupled with the positive impact of the Asian Games, it is optimistic about the performance recovery of leading domestic sports shoe and apparel brands. In the medium to long term, the sports shoe and apparel industry has significant market potential, and leading companies are deepening their advantages in marketing and R&D, solidifying their industry position. The firm suggests paying attention to companies benefiting from stable growth in leisure old customers, rapid penetration among new athletic customers, and steadily increasing the proportion of integrated fabrics, particularly the leading OEM companies that have led the industry in performance in the first half of the year. Additionally, in the short term, they are optimistic about a weak recovery in the performance of leading sports shoe and apparel OEM companies in the second half of the year; in the medium to long term, the sports shoe and apparel industry has vast market potential, leading OEM companies are highly competitive, and downstream customers are of excellent quality, with increased penetration rates for old customers and ongoing development of new customers, while capacity steadily expands, leading to expectations of robust long-term performance growth. GF SEC's main points are as follows: Downstream Brand Retail Industry of Sports Shoes and Apparel In the first half of 2026, the revenue side showed steady growth while the profit side also improved. According to iFind and the companys financial report, in 2026 H1, (1) Revenue and net profit attributable to shareholders: the sports shoe and apparel brand retail industry achieved revenue of 80.66 billion yuan, a year-on-year increase of 7.5%; net profit attributable to shareholders was 13.29 billion yuan, a year-on-year increase of 23.9%; (2) Gross margin and expense ratio: the gross margin of the sports shoe and apparel brand retail industry was 54.9% (YoY +1.2 pct); the sales expense ratio was 30.9% (YoY +0.8 pct); the management expense ratio was 5.8% (YoY -0.2 pct); (3) Operational indicators: the inventory turnover days for the sports shoe and apparel brand retail industry were 112 days, an increase of 7 days; accounts receivable turnover days were 37 days, a decrease of 1 day year-on-year. Upstream OEM Industry of Sports Shoes and Apparel In the first half of 2026, the revenue side declined, and the profit side faced pressure mainly due to fluctuations in raw material prices, exchange rates, and weak demand from some overseas brands. According to iFind and the companys financial report, in 2026 H1, (1) Revenue and profit: the sports shoe and apparel OEM industry achieved revenue of 62.67 billion yuan, a year-on-year decrease of 9.5%; net profit attributable to shareholders was 4.00 billion yuan, a year-on-year decrease of 44.6%; (2) Gross margin and expense ratio: the gross margin of the sports shoe and apparel OEM industry was 17.4% (YoY -3.9 pct); the sales expense ratio was 0.8% (YoY stable); the management expense ratio was 5.2% (YoY +0.5 pct); (3) Operational indicators: the inventory turnover days for sports shoe and apparel OEM enterprises were 72 days, an increase of 2 days; accounts receivable turnover days were 66 days, an increase of 6 days. Investment Suggestions (1) Sports Shoe and Apparel Brand Retail Industry: Looking ahead to Q3 2026, the firm expects a weak recovery in retail performance for the sports shoe and apparel brand retail industry. Firstly, the baseline for the same period last year is low; secondly, although July was affected by extreme weather, conditions have gradually returned to normal since August, and leading companies like Wuxi Online Offline Communication Information Technology Co., Ltd. have strong channel operations and risk resistance. Thirdly, this years Mid-Autumn Festival falls in September, which is expected to benefit sales. Lastly, the Aichi Nagoya Asian Games will be held at the end of September, and leading domestic sports brands are expected to leverage this major event to achieve effective brand exposure through competition scenarios and athlete visibility, enhancing market attention and positively influencing sales in the short term. (2) Upstream OEM Industry of Sports Shoes and Apparel: Looking ahead to Q3 2026, recovery is anticipated compared to the second quarter. Firstly, external demand is rebounding and internal demand is stabilizing, combined with a gradual clarification of U.S. tariff policies, it is expected that the order pattern from downstream customers will return to normal. Secondly, the performance baseline for leading companies in the industry is low due to the impact of U.S. reciprocal tariffs and trade frictions during the same period last year. Thirdly, the delay in price quotations resulting from rising raw material costs will manifest in the third quarter. Finally, the impact of exchange rate fluctuations is expected to weaken to some extent. Risk Warnings Risks of macroeconomic downturn, exchange rate fluctuations, and rising labor costs.