CICC: 1Q26 continued robust growth, with strong performance at the 2026 ordering conference

Recent Company Developments

The company announced its operating conditions for the first quarter of 2026: both the main brand of 361 Degrees and children's offline sales grew by approximately 10% year-over-year. E-commerce platform sales achieved mid-teens growth year-over-year.

1Q26 continued the trend of steady growth, with overseas business advancing steadily.Driven by factors such as the Lunar New Year shift and major sporting events, the industry performed well overall in 1Q26. Both the main brand of 361 Degrees and children's offline sales achieved approximately 10% year-over-year growth on a non-low base, continuing the previous positive trend. By the end of the quarter, the number of new Super Stores increased to 142. The company maintained a steady level of operations, with discounts for adult and children's offline products around 70%, remaining flat year-over-year, and inventory-to-sales ratio staying within the 4.5-5x range. Online, 361 Degrees' e-commerce sales achieved mid-teens growth year-over-year (1Q25 grew 35-40%), with discounts stable at 40-45%. Overseas business sales continued the positive growth momentum from 2025 into the first quarter, achieving significant breakthroughs in Southeast Asia and Europe. Currently, the company has established over 1,200 offline sales outlets overseas, while cross-border e-commerce demonstrated strong growth momentum, outperforming 2025.

The multi-category matrix continues to improve, with notable growth in outdoor categories.Scale categories such as running and sports lifestyle are leading growth. The company continues to iterate on its core products, with updates and upgrades to the running series including Speedster and Supersonic; core basketball series like Joker 2 GT remain popular. Outdoor categories have performed notably well, with robust sales growth seen in both the main brand's outdoor series and the ONEWAY brand, where all six directly operated stores turned profitable. Good performances were also observed in tennis, badminton, and skateboarding lines.

The 4Q26 pre-order meeting showed good results, with relatively limited impact from raw material costs.The company's 4Q26 pre-order meeting continued to demonstrate strong performance, with order growth primarily driven by volume. Growth in larger-sized apparel exceeded company expectations, while children's wear outperformed larger-sized apparel. Additionally, since the raw material costs were locked in during the first three quarters of pre-orders, we expect that the company's operations for the year will be relatively unaffected by fluctuations in raw material prices. Maintaining our EPS forecast for 2026/27 at RMB 0.72/0.79, the current share price corresponds to 8.4/7.5 times 2026/27 P/E. We maintain our 'Outperform Industry' rating. Considering the industry recovery and strong sales performance boosting valuation, we raised our target price by 15% to HKD 8.15, corresponding to 10 times 2026 P/E, offering a 20% upside from the current share price.

Risk

Risks include weaker-than-expected retail conditions, intensified industry competition, and slower-than-expected channel expansion.

33K Views