Goldman Sachs: Retail sales of core brands in the third quarter were reduced slightly to HK$5.3, in line with expectations

The Zhitong Finance App learned that Goldman Sachs released a research report saying that retail sales for the third quarter of the core brand of TEP International (01368) were generally in line with expectations. The bank lowered its net profit forecast for 2026 to 2028 by 1% to 2%, and the target price dropped slightly from HK$5.4 to HK$5.3, maintaining a “buy” rating.

In the third quarter of TEP International (01368), retail sales of TEP's core brands fell in units year over year. Compared with the year-on-year increase in the number of units recorded in the previous quarter, Saucone improved from a year-on-year increase in the number of units in the second quarter to a year-on-year increase in units. The bank believes that retail sales for the third quarter of XTEP's core brands were generally in line with its expectations of a 6% year-on-year drop in the second half of the year, but Sauchy was slightly lower than the bank's original forecast of a 9% year-on-year increase in the second half of the year.

The bank pointed out that sales performance during the Mid-Autumn Festival and National Day was in line with the company's expectations. The trend in October was generally similar to that of the third quarter. Consumers were still cautious, and warmer weather also dragged down winter clothing sales. The special step discount remained roughly the same during the period, Saucone maintained a prudent discount, and both brands maintained a healthy level of inventory. The management maintains the 2026 full-year guideline. It is expected that revenue will fall by a lower number of units than the previous year, and that the net interest rate will reach a high number of units. The revenue of Saucone and Merrell will increase by about 10%, the operating profit margin will not be lower than the level of 2025, and the annual dividend ratio will not be less than 50%.

The bank lowered TEP's 2026-2028 revenue forecast by less than 1%, which mainly reflects Saucone's weak sales; the bank believes that the valuation is low, and the dividend rate is expected to reach a high number of units.