Shenwan Hongyuan Group: Greater China Continues to Recover; Targeted Strategic Adjustments Across Brands

Shenwan Hongyuan Group released a research report stating that in the latest fiscal quarter, international sportswear brands showed divergent performance. Focusing on the Chinese market, the recovery trend in domestic sportswear and footwear consumption is clear. From January to August, cumulative retail sales of clothing, shoes, hats, and textiles reached RMB 961.5 billion, up 5.1% year-on-year, with clothing consumption growth outpacing overall social retail sales. Under global pressures of weak North American consumption and intense discount competition in Europe, international brands generally view Greater China as a core growth anchor, continuously upgrading the depth and intensity of localized operations. Based on the development momentum of global sports brands and the upstream price increase cycle, the report highlights investment directions in the sports industry chain, focusing on global supply chain manufacturers and sports outdoor brands. The main views of Shenwan Hongyuan Group are as follows: In the latest fiscal quarter, international sportswear brands showed divergent performance On/Adidas/Deckers/Nike/Lululemon/VF/Puma revenue changed by +13.5% /+13.3% /+5.7% /-1.1% /-4.3% /-5.2% /-9.7% year-on-year respectively, and net profit attributable to parent changed by turnaround to profit /-3.8% /-6.6% /+406.6% /-11.2% /narrowed loss /narrowed loss year-on-year respectively. Adidas recorded a historic high for single-quarter revenue in the same period, mainly benefiting from the World Cup catalyst. Nike's profit surged, mainly benefiting from a USD 986 million IEEPA tariff refund. Focusing on the Chinese market, the recovery trend in domestic sportswear and footwear consumption is clear From January to August, total retail sales of consumer goods reached approximately RMB 33 trillion, up 1.1% year-on-year, of which cumulative retail sales of clothing, shoes, hats, and textiles reached RMB 961.5 billion, up 5.1% year-on-year. Clothing consumption growth outpaced overall social retail sales, with prosperity continuing to recover. Among international brands, Adidas, Lululemon, and Puma all achieved positive growth in Greater China in the latest fiscal quarter, while only Nike continued to decline due to the channel adjustment cycle. Among domestic brands, in 26Q2 ANTA's multi-brand matrix performed steadily, with the ANTA main brand and FILA growing at low single digits, and other brands growing 25%-30%. LI NING and Xtep main brands saw declines in sales due to extreme weather, while 361 DEGREES performed steadily, maintaining overall growth resilience better than the industry. Under global pressures of weak North American consumption and intense discount competition in Europe, international brands generally view Greater China as a core growth anchor, showing clear strategic tilt from growth targets and channel layout to product marketing, with the depth and intensity of localized operations continuously upgrading. Greater China growth expectations are independent of global trends, with companies generally setting higher growth targets 1) Lululemon: Expects FY26 global revenue to decline 5%-7% year-on-year, but explicitly expects mainland China to achieve approximately high single-digit growth for the full year, highlighting strategic priority. 2) On: Although it lowered its global full-year growth guidance to the low range of 20%, Asia-Pacific (including Greater China) Q2 revenue grew 43.0% year-on-year, the highest growth market globally. The company continues to increase resource investment in the region, treating it as a core driver of long-term growth. Deepening channel localization, increasing store expansion against the trend, optimizing e-commerce and distribution operations Lululemon has opened 15 net new stores in Greater China since 25Q2, contributing revenue increment through new store density and store upgrades. Against the backdrop of a cautious global store strategy, Greater China has become one of the few markets still rapidly expanding stores. Puma is focusing on DTC direct operations and e-commerce channels in Greater China, performing strongly during the 618 e-commerce promotion. Nike plans to take back online channels operated by distributors to brand direct operations, strengthening direct control over terminal prices, product structure, and user data. Product and marketing localization, adapting to local needs and event milestones Brands have launched differentiated products and marketing strategies for the Chinese market based on consumer preferences, scenario characteristics, and marketing milestones. Adidas and Nike, leveraging the World Cup catalyst, launched exclusive football series products and local marketing activities for Greater China, driving significant growth in football category sales. Deckers' UGG brand broke through the seasonal limitations of traditional snow boots for the Chinese market, expanding into fashion casual footwear categories to drive year-round sales. Domestic clothing retail is recovering, industry improvement has started, most sports brands have shown impressive sales growth in Greater China, and brand strategies have also tilted accordingly Based on the development momentum of global sports brands and the upstream price increase cycle, investment directions in the sports industry chain are highlighted: 1) Global supply chain manufacturers: Zhejiang Weixing Industrial Development, Bros Eastern Co.,Ltd, SHENZHOU INTL, Huali Industrial Group. 2) Sports outdoor brands: ANTA SPORTS, LI NING, 361 DEGREES, BOSIDENG, with attention suggested on Benlai Nature. Risk warnings: Global demand growth falling short of expectations; brand inventory destocking; intensified industry competition; global trade uncertainty.