Cinda Securities: 361 Degrees demonstrates solid offline operations and resilient e-commerce performance despite a high base, with strong certainty of achieving its full-year guidance.

361 Degrees released its Q2 2026 operational data, reporting mid-to-high single-digit year-over-year growth in offline retail sales for both its main brand and children's wear segment, while total GMV from its e-commerce platforms recorded high single-digit positive growth.

Q2 GMV performance remained robust, with e-commerce sustaining resilient growth despite a high base.Considering the relatively high base in the same period of 2025 (main brand offline sales grew by approximately 10% YoY in Q2 2025, children’s wear offline sales also rose by around 10% YoY, and e-commerce platform sales increased by roughly 20% YoY), the company maintained mid-to-high single-digit growth amid persistently weak consumer sentiment, reflecting strong operational resilience. Notably, the e-commerce channel still achieved high single-digit growth against a high base, demonstrating the effectiveness of its differentiated product strategy.

Company growth drivers:

1) The online channel and Super Brand Stores are steadily advancing to capture incremental market opportunities.As of the end of Q2 2026, the company operated 187 Super Brand Stores (including 35 for children’s wear), adding 45 new stores in Q2 alone, with a full-year target of opening 80–100 new stores. On the e-commerce front, the company maintains a high proportion of exclusive SKUs online, and its dual-inventory strategy—differentiating products between online and offline channels—enables it to continuously expand into incremental markets.

2) Children’s apparel continues to perform strongly, establishing a clear second growth curve.Children's wear delivered mid-to-high single-digit offline growth in Q2, outperforming the main brand. The company is reaping benefits from its positioning as a youth sports specialist. Its children’s product lines are centered around youth sports and lifestyle scenarios: running serves as the core category, covering daily commuting and school running use cases; as the exclusive sponsor of China’s national jump rope team, the company holds a key advantage in jump rope footwear; and its basketball offerings leverage NBA star endorsements and R&D achievements from the main brand.

3) Continuous product technology iteration and robust patent reserves strengthen competitiveness.The company secured 1,500 patents in Q2, a net increase of 160 compared to Q1. Its summer new product lineup is extensive: in April, it launched the Mint T (featuring cooling technology that lowers perceived body temperature by 4 degrees within 30 minutes), the Bouncy Ultra-Light Carbon Critical Running Shoes, and the Light Oxygen 3.0 Kids' Running System; in May, it introduced the Big 3 7PRO basketball shoes, the Aaron Gordon Heartbeat Collection, and the Hurricane 2.0 kids' soccer cleats; in June, it rolled out the fourth-generation Titan family running shoes, the Fei Ran Dual-Environment Running Shoes, the Super Premium Basketball Shoes, and the Ling Ci Gen 2 trail running shoes. The company continues to iterate on its technologies and products, strengthening its competitive edge.

4) Accelerated international expansion opens up long-term growth potential.Overseas operations and cross-border e-commerce are key priorities this year. Southeast Asian store performance has been solid since the beginning of the year. In cross-border e-commerce, the company operates independent websites in Europe, the U.S., Southeast Asia, and Brazil, and maintains deep partnerships with platforms such as Shopee and Lazada. The newly appointed CEO brings extensive brand management experience, particularly in internationalization, digital transformation, and omnichannel retail, which is expected to significantly support the company’s overseas business development.

2026 Guidance:The company has set a 2026 revenue growth target of 8%–10%. Q1 growth exceeded the full-year guidance range, and Q2 maintained mid-to-high single-digit growth. We believe the likelihood of achieving the full-year target is high.

Earnings forecast:We forecast the company's attributable net profit for 2026–2028 to be RMB 1.416 billion, RMB 1.613 billion, and RMB 1.846 billion, respectively, corresponding to P/E multiples of 6.05x, 5.31x, and 4.64x.

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