1H inline with market expectation; 3Q-to-date retail sales stable QoQ
361 Degrees’(N-R)share priceclosed at +1.3% on Aug 12 following its1H25result announcement at noon. According to the release, sales/NPwere up11.0%/8.6% YoY, inline with market expectation, with 3Q to-date retail sales at+10% YoY.361 Degrees’sales growth washigher thanour1H25CL salesYoYestimatesfor covered companiesLi Ning and Xtep (see recently published sector note)but lower than our 1H25CL sales estimates for Antaat +13% YoY.361 Degrees’ online outgrewits offline at +45% YoY, anditsrunning category gained market share with sales at +21%YoY.1H25GPM expanded by 0.2pptsto 41.5%, thanks to effective discount control andahigher contribution from online, whileOPM narrowed by 0.7ppts to 19.9% due to growing expenses foronline business. Net-net, NPM was down 0.4ppts YoYto 15%. Its 1H25 dividend payout ratio increased to 45%, higher than the 40.3% in 1H24. Management maintained its FY25 guidanceofsales +10-15% and NPM of 10-12%, and it stated expected driverssuch as its Super Premium store network roll-out, global expansion, category diversification, and the development of the One Way outdoor brand.
1H25 in-line with sales/NP up 11%/8.6% YoY
Sales rose by 11% YoY for both itsadult and kids’ businessdriven by 7.5% YoY volume growth andtherest by average wholesale price.ECsales increased by 45% YoY,nowaccounting for 32% of total sales. Itsrunningcategory grew 21% YoY while basketball/athleisure were both +10% YoY.GPM was +0.2ppts YoYto 41.5% on higher onlinemix and controlled discounting(c.30% off in 1H). OPM contracted by 0.7ppts to 19.9% due to 40%+ YoY rise in EC sales-related expenses.AR days reduced to 146 days(-3 days YoY) but AP days was reducedby 17 days to 71 days on rising pressure from suppliers. Net cash stood at Rmb4.3bn, up 7.5% YoY.
3Q-to-date retail sales stable QoQ; FY25 guidance maintained
3Q-to-dateoffline/online retail sales growthis largelystableat +c.10%/20% YoY. FY25 guidancewas maintained: (1) sales to grow by 10-15%, (2) GPM at 40-42% (versusFY24: 41.5%), (3) A&P/R&D expense ratio at 10-13%/3-4%(versusFY24: 12.8%/3.4%), (4) NPM at 10-12%, and (5) AR/AP days at 145-149/70-80 days.
Super Premium roll-out, category expansion & brand cultivation as trio flywheels
361 Degrees highlighted growth drivers as(1) retail networkroll-outof theSuper Premiumstore (100 stores by end-FY25; 55 stores as of Aug 12), strengtheningits value-for-money positioning; (2) global expansion and cross-border e-commerce development (sales up 94% YoY though the scale is still small), with a subsidiary ready and the first direct operated retail store opened in Malaysia in 1H; (3) category diversificationinto badminton, outdoor, etc.; (4) the development of the One Wayoutdoor brand in Chinaandplans to open fiveoffline stores by Oct 2025.
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