Shenwan Hongyuan: 361 Degrees (01361) maintains double-digit growth in sales, exceeding targets for premium store expansion

The company released its Q4 2025 operational data, showing continued high sales growth in the fourth quarter with strong multi-channel synergy.In the fourth quarter of 2025, both adult and children's offline retail sales of 361 Degrees grew approximately 10% year-on-year, continuing the growth momentum from the first three quarters. E-commerce sales grew by a high double-digit percentage year-on-year, surpassing expectations. Despite an overall industry slowdown in Q4, the company demonstrated strong growth momentum, highlighting its resilience across all channels, showcasing the competitive advantage of its high-quality pricing strategy and new channel layouts like premium stores.

Inventory remains at a reasonable level, with stable discount rates.The discount rate in Q4 remained stable at 70-71% off, continuing the trend from Q3; inventory-to-sales ratio stayed within the 4.5-5x range, maintaining a healthy level, with overall operations remaining robust.

Superstore expansion exceeded expectations, becoming a new engine for offline growth.As of December 31, 2025, the number of superstores reached 126 (including 21 children's stores), surpassing the expected rollout pace. The first overseas superstore grandly opened in Cambodia, marking a new step abroad. Superstores have significant advantages: each store spans 800-1,200 square meters (equivalent to 5 regular stores), with a new customer acquisition rate of 60%-70%, and 50% located in first- and second-tier cities, effectively complementing traditional stores that mainly cover lower-tier markets. Sell-through and add-on sales rates are significantly higher than regular stores, with notably reduced operating costs. In 2026, superstores will become the main focus of expansion, penetrating uncovered commercial complexes as brand image showcases and offline highlights to continuously drive growth.

Product iteration and increased marketing efforts continue to boost brand momentum.The company maintains high-quality rapid iteration and cost-effective positioning on the product side. In running, the new racing family 'Feiran 5' and 'Feiran 5 FUTURE' were launched, while the 361 Degrees Supai Family 3 underwent a full upgrade. 'Supai FLOAT3' features new CQT midsole technology for enhanced protection and rebound acceleration. The high-performance dual-density cushioning trail running shoe 'Lingci 1' was launched, providing runners with excellent grip and foot protection in mountain environments. In basketball, Aaron Gordon’s sixth signature basketball shoe, 'AG6,' was released, and Nikola Jokic’s second signature basketball shoe, 'JOKER2,' debuted in the US, leveraging Jokic’s personal influence for strong sales conversion. In terms of marketing, on December 26, Brand Day, the company announced renewed cooperation with the Olympic Council of Asia, entering a new strategic partnership phase. It also deepened strategic cooperation with Kanglun Aerospace and Tianjin University of Sport, integrating aerospace technology and sports science resources to jointly promote competitive sports development. Additionally, it became the official supplier of the 2025 WTCC World Tennis Continental Championship, supporting high-standard presentation of top-tier international tennis events.

One Way accelerates its layout, capitalizing on the outdoor trend.The One Way brand, founded in Finland in 2004, offers equipment and clothing for winter sports and professional cycling. 361 Degrees established a joint venture with One Way at the end of 2013 to expand the outdoor market in Greater China, initially holding 70% of shares, later increasing to 100%. Over the past few years, the One Way brand faced adjustments due to pandemic disruptions but began re-aligning its product lines in the second half of 2024 to adapt to the current outdoor trend. The brand opened six new offline stores in Q4, accelerating its offline presence. Store sizes are approximately 100-120 square meters, offering around 120 SKUs covering professional skiing, outdoor, and general outdoor products. Product functionality rivals international top brands but is priced more affordably. Plans for 2026 include launching more footwear and women's products, potentially creating a second growth curve amid the ongoing outdoor trend.

With over two decades of experience in the sports industry, the company has accelerated efforts in recent years to deepen its capabilities in products, branding, and channels. Continuous brand upgrades and channel optimization are gradually showing results.Amid consumption stratification, the company's products offer both high cost-effectiveness and strong functionality, with distribution primarily in lower-tier markets. Supported by short-term sports event catalysts and long-term efficient operations, the company is expected to maintain faster-than-industry growth, increase market share, and has a positive long-term outlook. The profit forecast is maintained, expecting net profits of 1.26/1.39/1.51 billion yuan for 2025-2027, corresponding to PE ratios of 9/8/7x, and the stock maintains a buy rating.

Risk Warning: Risks of intensified industry competition; risks of terminal demand and seasonal fluctuations; risks of new business expansion falling short of expectations.