Shen Wan Hongyuan: Continued recovery in Greater China, targeted adjustments to each brand's strategy

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the performance of international sports brands in the latest fiscal season was divided, focusing on the Chinese market. The trend of recovery in domestic sports shoes and clothing consumption was clear. The cumulative retail sales of clothing, shoes, hats, and knitwear were 961.5 billion yuan in January-August, an increase of 5.1% over the previous year, leading the clothing consumption growth rate. Under global pressure from weak consumption in North America and internal European discounts, international brands generally regard Greater China as a core growth anchor, and the depth and intensity of localized operations continues to upgrade. Based on the development trend of global sports brands and the upstream price increase cycle, the bank suggests the investment direction of the sports industry chain and focuses on global supply chain manufacturers and sports outdoor brands.

Shen Wan Hongyuan's main views are as follows:

In the latest fiscal quarter, the performance of international sports brands was divided

ON/adidas/Deckers/Nike/VF/PUMA revenue was +13.5%/+13.3%/-1.1%/-4.3%/-5.2%/-9.7%, respectively, and net profit to mother turned a year-on-year profit, -3.8%/-6.6%/+406.6%/-11.2%/loss/loss reduction. Adidas's revenue in a single quarter reached a record high for the same period, mainly benefiting from World Cup catalysts. Nike's profit surged, mainly benefiting from the US$986 million IEEPA tariff rebate.

Focusing on the Chinese market, the recovery trend of domestic sports footwear consumption is clear

The total retail sales of consumer goods in January-August was about 33 trillion yuan, up 1.1% year on year. Among them, the cumulative retail sales of clothing, shoes, hats, and knitwear were 961.5 billion yuan, an increase of 5.1% year on year. The clothing consumption growth rate leader was zero overall, and prosperity continued to recover. Among international brands, Adidas, Lululemon, and Puma all achieved positive growth in Greater China in the latest fiscal quarter. Nike alone continued to decline due to the channel adjustment cycle. Among domestic brands, the 26Q2 Anta multi-brand matrix showed steady performance. Anta's main brand and FILA grew by a low number of units, while other brands grew by 25%-30%. The main brands Li Ning and TEP saw a decline in turnover due to extreme weather. The 361 degree performance was steady, and the overall growth resilience was superior to that of the industry.

Under global pressure from weak consumption in North America and internal European discounts, international brands generally regard Greater China as a core growth anchor. From growth targets and channel layout to product marketing, the depth and intensity of localized operations continues to upgrade.

Growth expectations in Greater China are independent of the rest of the world, and companies generally give higher growth targets

1) Lululemon: FY26's global revenue is expected to fall 5% to 7% year over year, but mainland China is clearly expected to achieve about single-digit growth throughout the year, highlighting the strategic priority. 2) On: Although the global annual growth guide was lowered to a low 20% range, Q2 revenue in the Asia-Pacific region (including Greater China) increased by 43.0% year on year, making it the fastest growing market in the world. The company continues to increase resource investment in the region as the core driving force for long-term growth.

Deepening channel localization, bucking the trend, increasing store expansion and optimizing e-commerce and distribution operations

Since 25Q2, Lululemon has opened 15 new stores in Greater China, contributing to revenue growth through new store encryption and store upgrades. Against the backdrop of cautious global store strategies, Greater China has become one of the few markets that are still rapidly expanding stores. Puma focused on developing DTC direct sales and e-commerce channels in Greater China, and performed well during the 618 e-commerce promotion period. Nike plans to take over online channels operated by distributors directly to the brand to strengthen direct control over terminal prices, product structure, and user data.

Localization of products and marketing, adapting to local needs and competition nodes

Each brand launches differentiated products and marketing strategies based on consumer preferences, scene characteristics and marketing nodes in the Chinese market. Using the World Cup as catalyst, Adidas and Nike launched an exclusive series of soccer products and local marketing campaigns for the Greater China region, driving a significant increase in sales in the soccer category. UGG, a subsidiary of Deckers, broke through the seasonal restrictions of traditional snow boots for the Chinese market, expanded the category of fashionable casual footwear, and promoted year-round sales.

Domestic clothing retail is picking up, industry beta improvements have begun, most sports brands have seen impressive sales growth in Greater China, and brand strategies have also been skewed

Based on the development trend of global sports brands and the upstream price increase cycle, it suggests the direction of investment in the sports industry chain: 1) Global supply chain manufacturers: Weixing Co., Ltd., Blum Oriental, Shenzhou International, and Huali Group. 2) Sports and outdoor brands: Anta Sports, Li Ning, 361 Degrees, Bosideng. It is recommended to focus on nature.

Risk warning: Global demand growth falls short of expectations; brand inventory removal; industry competition intensifies; global trade uncertainty.