Cinda Securities: 361 Degrees: Q4 Demonstrates Resilience, Super Stores Expected to Drive Growth Beyond Industry Average

In Q4 2025, the retail sales of 361 Degrees' main brand achieved approximately 10% positive growth. The retail sales of 361 Degrees' children's brand also achieved approximately 10% positive growth. The e-commerce platform of 361 Degrees achieved high double-digit positive growth.

Both the main brand and children’s lines achieved close to 10% growth in Q4, reflecting the company’s core business’s strong anti-cyclical ability despite a downturn in the consumption environment. Terminal discounts remained stable at 7-7.1 off, with inventory turnover staying healthy at 4.5-5x, laying a solid foundation for subsequent product launches and channel expansion. Online maintained high double-digit growth; offline innovative formats such as “Super Product Stores” exceeded expectations in expansion.

The company’s product portfolio continues to improve, with accelerated iterations in its core running shoe series (e.g., Feiran 5) and basketball shoes (e.g., Jokic Gen 2, AG6), which benefit from star athlete endorsements and see strong sales. Seasonal outdoor series (e.g., Rain Shield Trench Coats, Yubing Mountaineering Jackets) performed well. On the marketing front, the company deepens sports marketing, strengthens marathon sponsorship, and expands high-end collaborations by becoming the official supplier of the World Team Championship (WTCC), enhancing brand influence among professional sports and high-end consumer groups.

Regarding new formats, the Super Product Store format reached 126 stores by the end of 2025, showing significantly better performance than regular stores in terms of customer acquisition rate, cross-selling rate, and sell-through rate, emerging as a core growth engine. In 2026, further expansion will be prioritized, which we expect will further enhance store efficiency and upgrade the brand image. The professional outdoor line One Way currently operates six stores, meeting expectations. Positioned in the mid-to-high-end outdoor market, this brand is expected to form synergy with the main brand to jointly expand outdoor sports consumption scenarios.

The company’s spring/summer 2026 pre-orders are expected to achieve good growth, reflecting continued channel confidence. Wholesale discount levels may remain around 38%, demonstrating the company’s commitment to maintaining channel profitability. Driven by improved product strength, new format growth, and intensified brand marketing, the company expects annual results to exceed industry-average growth.

We expect the company's net profit attributable to shareholders for fiscal years 2025-2027 to be RMB 1.261/1.368/1.564 billion, corresponding to PE ratios of 8.67X, 7.99X, and 6.99X respectively.

Slower-than-expected consumer recovery, continued pressure on offline retail, and slower-than-expected expansion of new businesses.