Guosen: The decline in August apparel retail sales narrowed; China's footwear and apparel export growth accelerated.

Guosen released a research report stating that amid brand differentiation, investors should seize high-end consumption opportunities, while the manufacturing sector should focus on fundamental improvement and continued resilience. In August, apparel retail sales continued to decline but the drop narrowed slightly, down 0.5% year-on-year, with cumulative year-to-date growth of 5.1%; in August, China's textile/apparel/footwear exports grew 2.3%/12.4%/11.4% year-on-year respectively, with apparel/footwear export growth accelerating. Brand apparel differentiation continues, with relatively good demand resilience in high-end sports and outdoor, high-end casual, and mid-to-high-end home textiles; textile manufacturing external demand and brand restocking continue to recover, and fundamentals are expected to gradually improve. Guosen's main points are as follows: Market Review Since September, the A-share textile and apparel index has outperformed the broader market, with brand apparel outperforming textile manufacturing, at -0.2%/-2.1% respectively; the Hong Kong stock textile and apparel index has fallen 3.9% since September, underperforming the broader market. Among key companies, those with leading gains since September include: JNBY (6.3%)/SHENZHOU INTL (2.9%)/Zhejiang Xinao Textiles Inc. (2.3%)/BOSIDENG (2.0%)/Anhui Korrun (1.9%)/Makalot Industrial (1.5%)/Feng Tay Enterprises (1.2%)/Biem.L.Fdlkk Garment (1.1%)/Zhejiang Jasan Holding Group (0.9%)/Hla Group Corp. (0.8%). Brand Apparel Views 1) Omnichannel: In August, apparel retail sales continued to decline but the drop narrowed slightly, down 0.5% year-on-year, with cumulative year-to-date growth of 5.1%. July and August monthly performance was weaker than overall retail sales; 2) E-commerce: The macroeconomic consumption environment weakened, and e-commerce performance continued to come under pressure in August 2026, but the decline narrowed month-on-month. Sales for sports apparel/outdoor apparel/casual apparel/home textiles/personal care were -9%/-10%/-8%/-11%/+1% year-on-year respectively. Among sports apparel, Adidas (17%), ASICS (13%), and Skechers (6%) led growth; among outdoor brands, Kailas (63%), Beneunder (47%), and Columbia (37%) performed relatively well; among casual apparel, Biem.L.Fdlkk Garment (265%), BOSIDENG (77%), and Lilanz (57%) led growth; among home textile brands, Atour Planet (114%), Nanjiren (73%), and Luolai Home Textile (30%) achieved growth; among personal care brands, 7Space (25%), Whisper (21%), and C&S (11%) led growth. 3) Xiaohongshu: From June to August 2026, the top three sports and outdoor brands by follower growth over the past three months were Adidas (25.8%), Xtep (11.5%), and Descente (7.9%); the top three casual fashion brands by follower growth were DAZZLE (8.1%), MIUMIU (4.7%), and Uniqlo (3.5%); the top three maternal and personal care brands by follower growth were Babycare (14.3%), Free (7.6%), and Neisi Princess (1.7%). Textile Manufacturing Views 1) Textile exports: In August, Vietnam's textile exports grew 3.5% year-on-year for the month, and footwear exports grew 0.9% year-on-year, maintaining stable growth; in August, China's textile/apparel/footwear exports grew 2.3%/12.4%/11.4% year-on-year respectively, with apparel/footwear export growth accelerating, and cumulative growth for the first eight months at +3.7%/+2.5%/-4.7% respectively; Indonesia/India PMI fell 0.4/0.7 month-on-month respectively, while Vietnam PMI rose 0.4 month-on-month. 2) Raw material prices: Year-to-date, both domestic and international cotton prices have shown an upward trend, rising 16.1%/24.9% to 18,060 yuan/ton and 16,207 yuan/ton respectively; from their year-to-date highs on September 2/September 1, they have fallen 2.0%/4.9% respectively, and since September both have shown a downward trend, at -1.9%/-4.1% respectively, with the domestic-international cotton price spread widening. Year-to-date, nylon FDY/nylon DTY/polyester FDY/polyester DTY prices have generally shown an upward trend. As of September 6, 2026, they rose 22.6%/23.8%/39.6%/30.9% to 15,200 yuan/ton, 17,080 yuan/ton, 9,310 yuan/ton, and 17,060 yuan/ton respectively, up 23.6%/19.4%/30.2%/25.0% year-on-year respectively. Year-to-date, wool prices rose 32.9% to US$13.57/kg. As of September 10, they were up 55.6% year-on-year, and have risen 2.0% month-to-date in September. Year-to-date, PA6 and PA66 prices rose 43.1%/22.7% to 14,500 yuan/ton and 19,100 yuan/ton respectively. As of September 10, they were up 41.7%/16.2% year-on-year respectively, and up 10.1%/6.1% month-to-date in September respectively. 3) OEM Taiwanese companies: August was overall weaker than July, among which Yue Yuen's year-on-year decline narrowed significantly, with revenue improving from -9.7% in July to -2.1%, and manufacturing operations improving from -10.0% to -1.6%; most key companies saw year-on-year growth weaken compared with July. Feng Tay turned from +1.00% in July to -2.79%, mainly due to a high base in the same period last year; Lai Yi dropped to +3.13% year-on-year, with August NT dollar revenue down 11.96% month-on-month, and shipment performance weaker than July; Eclat turned from +23.26% to -1.13%, mainly affected by Vietnamese holidays, typhoons, and tight shipping schedules, with approximately NT$450 million of shipments deferred; Makalot turned from +7.86% to -5.12%, but August revenue still grew 18.49% month-on-month, mainly affected by customers pulling forward orders in August last year due to tariff factors and the high base in the same period. Overall, Taiwanese companies' August performance was disturbed by logistics, exchange rates, and a high base, and going forward attention should be paid to the fulfillment of deferred orders in September and the sustainability of brand restocking. Investment Recommendations: Amid brand differentiation, seize high-end consumption opportunities; in the manufacturing sector, focus on fundamental improvement and continued resilience 1) Brand apparel: Differentiation continues, high-end consumption resilience is relatively strong, and focus should be on sub-sectors with relatively leading prosperity. In August, apparel retail sales and e-commerce platform performance continued to come under pressure, but high-end sports and outdoor, high-end casual, and mid-to-high-end home textiles still showed relatively good demand resilience and operating performance. Among sports and outdoor apparel, Adidas, Sanfo X, Kolon, Kailas, and Salomon led e-commerce growth; among casual apparel, Biem.L.Fdlkk Garment led growth. It is recommended to seize high-end consumption-related companies with relatively good third-quarter fundamental trends and outstanding operating quality, with key recommendations for ANTA SPORTS, Beijing Sanfo Outdoor Products, JNBY, Biem.L.Fdlkk Garment, and Luolai Lifestyle Technology. 2) Textile manufacturing: External demand and brand restocking continue to recover, and the manufacturing sector's fundamentals are expected to gradually improve. In August, China and Vietnam textile exports maintained growth; some OEM Taiwanese companies' monthly performance was disturbed by short-term factors such as a high base, exchange rates, and shipping schedules, and subsequent fulfillment of deferred orders and brand restocking are expected to drive operating improvement. It is recommended to focus on recovery-type targets with marginal improvement in orders and profitability, while also seizing quality manufacturers with high order visibility, outstanding operating resilience, and performance expected to continue, with key recommendations for SHENZHOU INTL, Huali Industrial Group, Zhejiang Xinao Textiles Inc., Zhejiang Weixing Industrial Development, and Anhui Korrun.