Cinda Securities: 361 Degrees delivered strong performance in Q1 despite a high base, with promising prospects for the full year

Event: The company released its Q1 2026 operating data. Retail sales of the main brand's offline channels grew approximately 10% year-over-year, children's wear offline retail sales increased about 10%, and the e-commerce platform recorded a mid-teens positive growth in overall sales.

Q1 sales performance was strong, with e-commerce continuing its high growth.Considering the relatively high base from the same period in 2025, where the main brand's offline sales grew 10%-15% year-over-year, children's wear offline sales increased 10%-15%, and e-commerce platform sales grew 35%-40%, the company maintained solid growth amid weak consumer recovery. In particular, the e-commerce channel remained robust, with online-exclusive products accounting for 80% of sales. Starting from 2025, the brand has fully integrated into instant retail channels such as Meituan Group Buy, Meituan Flash Purchase, Taobao Flash Purchase, and JD.com's instant delivery, which is expected to further drive e-commerce segment growth.

Company Growth Drivers:

1) The Super Store model marks a major breakthrough in the retail system.By the end of 2025, there were 127 super stores, with a target to add no less than 100 new stores in 2026. The super store concept focuses on 'thousand-square-meter space, full-scenario product categories, and one-stop shopping,' significantly improving sales per square meter and profitability.

2) Children's wear continues to perform strongly, establishing a clear second growth curve.The company's children's wear brand reinforces its positioning as a youth sports expert through events and resource collaboration. At the 2025 World Jump Rope Championships, in partnership with the Chinese National Jump Rope Team, they won 137 medals and set 15 new world records, enhancing the brand’s professional influence. Children's wear has become the group’s second growth driver, generating revenue of 2.58 billion yuan in 2025, an increase of 10% year-over-year, accounting for 23.2% of total revenue.

3) Outdoor and new brands contribute incremental growth. The main brand, 361 Degrees, launched its Qingye outdoor series.One Way, the Nordic premium outdoor brand, opened seven stores in 2025, gradually expanding its retail network. It focuses on three product lines: professional skiing, professional outdoor, and urban casual outdoor. We believe it has the potential to become a significant growth driver for the company in the future.

4) Overseas expansion opens up long-term potential. International business retail sales are expected to grow by 125.4% year-over-year in 2025, cross-border e-commerce by approximately 200%, with 1,253 overseas outlets.The first directly operated store in Malaysia will be established in 2025, and the premium store in Cambodia has already opened. The company is advancing its overseas branding through direct stores, indicating promising future growth.

Guidance for 2026: The company’s revenue growth target for 2026 is set at 8-10%.Q1 overall growth rate exceeded the full-year guidance, and we believe the likelihood of achieving the annual target is strong.

Profit forecast:We project the company’s net profit attributable to shareholders from 2026 to 2028 to reach 1.416/1.613/1.846 billion yuan, corresponding to PE ratios of 8.54X, 7.50X, and 6.55X, respectively. Risk warnings: Consumer recovery below expectations, continued pressure on offline retail, and slower-than-expected new business expansion.

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