Despite a downturn in consumer spending, 361 Degrees demonstrates resilience over the long haul

Against the backdrop of overall consumer sentiment remaining cautious and mixed performance among sportswear brands, domestic sportswear brand 361 Degrees continued to achieve double-digit growth in the fourth quarter last year, showcasing impressive resilience.

Key points:

* 361 Degrees' main brand and children’s wear offline retail sales grew approximately 10% year-over-year in Q4, with e-commerce sales maintaining a high double-digit increase.

* The number of 'Super Brand Stores' has surpassed 100, becoming a core driver in the company’s efforts to restructure its retail environment and enhance per-store efficiency.

Author: Li Shida

In China’s sporting goods market, 'consumer downgrade' is often seen as a watershed. On one side, leading brands continue to push for premiumization and technology; on the other, some struggle amid price competition. However, $361 DEGREES (01361.HK)$ the trend over the past year has painted a relatively counterintuitive curve. Against the background of still cautious consumer sentiment, this brand—long labeled as 'affordable'—has continuously recorded double-digit growth and gradually built a new narrative distinct from its past.

The company’s latest release for Q4 2025Operational Summaryshows that 361 Degrees’ main brand and children’s wear brand both achieved approximately 10% year-over-year growth in offline channel retail sales, while e-commerce platforms saw an overall high double-digit increase in sales. Amid fluctuating consumer momentum at year-end and some sportswear brands needing to ramp up promotional efforts to sustain sales, 361 Degrees managed to maintain double-digit growth at the retail level, indicating its demand base has not weakened.

In fact, the company’s interim report had already shown a considerable degree of stability, with revenue in the first half reaching 5.705 billion yuan ($817 million), representing an 11% year-over-year increase; net profit attributable to shareholders was 858 million yuan, rising 8.6% year-over-year. During the same period $ANTA SPORTS (02020.HK)$Revenue increased by approximately 14% year-over-year, but net profit fell by 8.9% annually. The growth rate of its core brand Anta has slowed to a mid-single-digit range, and the group's overall performance relies more on FILA and other brands for support. $LI NING (02331.HK)$Mid-term revenue grew by only about 3.3%, with net profit falling nearly 11%, reflecting ongoing pressures at the retail level and discounting. $XTEP INT'L (01368.HK)$Mid-term revenue increased by 7.1% year-over-year, with net profit surging over 20%. However, the growth rate of the main brand was only in the low-to-mid single digits, with momentum primarily driven by niche brands like Saucony.

This indicates that 361 Degrees' growth is not based on a full industry recovery but rather finding its rhythm within a weak consumer environment and a fragmented brand landscape.

In recent years, 361 Degrees has gradually concentrated resources on specialized sports categories such as running and basketball, attempting to establish a clearer performance positioning in the mid-range price segment rather than relying solely on price competition. From racing shoes and carbon plate product lines to professional product portfolios built around basketball events and endorsers, the company aims to expand its stable customer base within the 'professional enough but not out-of-reach' range.

On the channel front, another important theme is taking shape. In recent years, the company has continuously adjusted the roles of online and offline channels, with e-commerce platforms gradually shifting from inventory-clearing tools to taking on more regular sales functions. By increasing the proportion of exclusive products, integrating instant retail, and content-driven marketing, online channels are no longer heavily reliant on single promotional periods. The double-digit growth in e-commerce turnover during the third and fourth quarters, even outside peak seasons, reflects that this transformation has started to yield tangible results.

Expansion of large-scale stores

Offline, the 'Super Product Store' has become an important vehicle for strategy implementation. The company stated that by the end of last year, the number of 'Super Product Stores' under 361 Degrees nationwide had reached 126, mainly large composite stores supplemented by children-exclusive stores. These thousand-square-meter stores emphasize full-category and scenario-based coverage, aiming to meet family-oriented, one-stop sports consumption needs. For 361 Degrees, their significance lies not only in expanding store scale but also in enhancing single-store category coverage and conversion efficiency, reducing reliance on single hit products and promotional cycles.

The children’s business also plays a stabilizing role in the overall structure. Children's sports consumption is significantly influenced by household spending arrangements and essential demands, showing lower volatility compared to the adult market. In the fourth quarter, offline retail for children's products and the main brand achieved approximately 10% growth simultaneously, helping 361 Degrees reduce its reliance on the adult market and stabilize cyclical fluctuations.

Mid-term data shows that the company's gross margin remained above 41%, but operating profit margin slightly declined due to increased investments in R&D, brand promotion, and channel development. Given that the company is still in a period of investing in new stores, endorsements, and product development, the true payoff in profit margins seems yet to come.

At the market level, after the release of the Q4 operational summary, 361 Degrees' share price saw a slight drop of approximately 0.34% on the same day. However, over a longer timeframe, the stock has risen about 17% in the past six months, outperforming the broader market during the same period. This indicates that the market has already re-priced its improving fundamentals to a certain extent, but the overall valuation has yet to fully reflect changes in its business structure.

Currently, 361 Degrees' forward P/E ratio is approximately 8.7x, lower than Xtep’s 9.8x, Anta’s 14.7x, and Li Ning's 16.3x. This conservative valuation also provides some buffer for investment. Given continued earnings growth and improved cash flow, the downside risk for 361 Degrees remains relatively manageable. The efficiency improvements brought by the gradual implementation of strategic initiatives still have the potential to be reflected in future performance. Its stability and clear strategy are believed to be gradually drawing market attention.

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