Emperor Securities: 361 Degrees (1361 HK) FY25 results broadly in line with expectations

FY25 revenue/net profit attributable to shareholders increased by 11%/14% year-over-year

FY25 revenue grew by 10.6% year-over-year to RMB 11.1 billion. The main brand's offline retail sales flow (measured by retail value) increased year-over-year by approximately 10%-15%/10%/10%/10% in 1Q/2Q/3Q/4Q25 respectively; 361° Kids' offline retail sales flow also increased year-over-year by approximately 10%-15%/10%/10%/10% respectively. Gross margin remained at 41.5%, with adult footwear/adult apparel/kids' footwear/kids' apparel gross margins changing year-over-year by +0.1/+1.1/+0.3/+0.3 percentage points to 43.0%/42.4%/41.7%/42.2% respectively. Improvement in adult apparel gross margin was mainly due to optimized cost control, strategic pricing, and the benefits from the integration of acquired OEM factories; the increase in kids' product gross margin was primarily driven by internalized production. Selling and distribution expenses increased by only 2% year-over-year to RMB 2.256 billion, with related expense ratio decreasing from 22.0% in FY24 to 20.2% in FY25, mainly due to a year-over-year increase of approximately 18% in e-commerce platform service fees and logistics-related costs, partially offset by a year-over-year decline of about 10% in advertising and promotional expenses. Administrative expenses increased by 22% year-over-year to RMB 854 million, primarily due to increased depreciation and amortization, as well as significantly higher donations. As a result, FY25 net profit attributable to shareholders increased by 14.0% year-over-year to RMB 1.309 billion; the full-year dividend payout ratio remained at 45.0%.

Kids' business maintains steady growth

361° Kids' revenue increased by 10.4% year-over-year to RMB 2.583 billion, accounting for approximately 23% of total revenue, primarily driven by footwear/apparel revenue increasing/decreasing by 28.5%/7.5% year-over-year respectively. As of the end of FY25, 361° Kids had a total of 2,364 sales outlets (POS), of which 374 were located within main-brand stores; by city tier, approximately 67.5%/25.4%/7.1% were located in third-tier and below/second-tier/first-tier cities respectively. Meanwhile, the number of 361° Kids super stores and fifth-generation image stores increased to 387, accounting for 16.4% of the total number of kids' stores; average store area increased by 12 square meters year-over-year to 124 square meters.

Online sales increased by 26% year-over-year, accounting for nearly 30% of total revenue

E-commerce revenue increased by 25.9% year-over-year to RMB 3.286 billion, accounting for 29.5% of total revenue (FY24: 25.9%). The brand has now fully integrated into instant retail channels such as Meituan Flash Purchase, Meituan Group Purchase, Taobao Flash Purchase, and JD.com Instant Delivery, with over 1,000 stores nationwide connected to these platforms, marking the brand's official entry into a new phase of instant retail. In terms of overseas business, 2025 overseas retail sales (measured by sales value) increased by approximately 125.4% year-over-year, while the total number of overseas POS stood at 1,253 at the end of FY25. In January 2025, 361° opened its first overseas directly operated store in Kuala Lumpur, Malaysia, marking the brand’s overseas channel extending from mere expansion to direct operation.

Maintain 'Buy' rating, upgrade target price to HKD 7.8

By the end of FY25, 361 Degrees' main brand had a total of 5,394 sales outlets in mainland China (FY24: 5,750), with average store size increasing by 16 square meters year-on-year to 165 square meters. During the same period, the total number of 361 Degrees’ premium stores increased to 127, including 21 children's premium stores, and the first overseas premium store was opened. Based on FY25 performance and progress in channel upgrades, we have slightly raised our forecasts for shareholders' net profit for FY26/FY27 by 1.2%/0.7% and introduced FY28 forecasts; the target price has been upgraded to HKD 7.8, maintaining the 'Buy' rating.

47K Views