A research report from Shenwan Hongyuan Group Co., Ltd. indicates that domestic apparel retail sales showed signs of recovery in the first quarter of 2026, marking the start of an industry-wide improvement. Domestic sportswear brands continued to show resilience and improving momentum despite high year-on-year comparables, while international brands also demonstrated a recovery trend in their Greater China sales. Considering the global growth momentum of sportswear brands and the ongoing upstream price increase cycle, the report highlights two key investment directions within the sportswear industry chain: 1) globalized supply chain manufacturers, and 2) sportswear and outdoor brands. The main viewpoints from Shenwan Hongyuan are detailed below.

Key Performance of International Sportswear Brands

In the latest fiscal quarter, most international sportswear brands reported steady revenue growth, though their profit performances varied. Deckers, Adidas, Lululemon, VF, Nike, and Puma saw their revenues change by +9.6%, +7.1%, +4.3%, +1.0%, +0.1%, and -6.3% year-on-year, respectively. Their corresponding net profits attributable to shareholders changed by -10.5%, +12.6%, -38.0%, +20.9%, -34.5%, and +5200% year-on-year. Puma's exceptionally high profit growth was primarily due to a low base in the prior period.

Guidance for Upcoming Fiscal Periods

Guidance for the next fiscal quarter from international brands appears cautious, and full-year performance forecasts are mixed. For the next quarter, Deckers anticipates revenue growth of approximately 5% year-on-year for FY27 Q1, while VF expects a low single-digit percentage decline. Lululemon forecasts a revenue decline of 2%-3% for FY26 Q2, and Nike projects a decline of 2%-4% for FY26 Q4. The overall cautious stance for the upcoming quarter is attributed to tariff concerns and subdued consumer demand. For the full fiscal year, Deckers expects high single-digit revenue growth for FY27, Adidas forecasts high single-digit growth for FY26, and VF anticipates growth of 1%-2% for FY27. Conversely, Lululemon expects a slight decline of 0%-1% for FY26, and Puma projects a mid-to-low single-digit percentage decline for FY26.

Regional Sales Performance Analysis

Analyzed by region, most brands demonstrated solid sales in North America/the United States during the latest quarter, while the Greater China region showed a clear recovery trend. In North America/the US, revenues for Nike, Adidas, VF, and Deckers increased by +3.3%, +1.4%, +1.5%, and +0.3% year-on-year, respectively, while Puma and Lululemon saw declines of -1.8% and -3.6%. In Greater China, Lululemon, Adidas, and Puma (on a constant currency basis for Puma) reported strong revenue growth of +28.5%, +10.3%, and +9% year-on-year, respectively, although Nike experienced a -6.8% decline. Demand in Greater China continues to recover, with most brands successfully adjusting inventory levels. Lululemon sustained high growth through new store openings and increased foot traffic, while Puma's direct-to-consumer and e-commerce channels grew robustly, with strong performance during the Chinese New Year period and high demand for its Speedcat series. In Europe/EMEA, Adidas, Nike, and VF reported revenue changes of +5.2%, +2.2%, and +0.9% year-on-year, respectively, while Puma saw a -13.1% decline. Excluding currency effects, the actual revenues for Nike and VF in the EMEA region also declined, reflecting pressures such as inventory surplus and intense discounting in the European market.

Inventory Status Update

Nike is making continuous progress in inventory reduction. At the end of the latest quarter, its inventory value decreased by 0.7% year-on-year. Although the inventory value in North America increased, primarily due to US tariff impacts, the actual inventory quantity decreased. For Adidas, Lululemon, Deckers, Puma, and VF, inventory values changed by +14.1%, +2.1%, -1.7%, -8.6%, and -15.7% year-on-year, respectively. Adidas's inventory continued to grow year-on-year, mainly due to proactive procurement to ensure timely supply of World Cup-related products, with most event merchandise shipped to markets in advance.

Performance of Domestic Sportswear Brands

Domestic sportswear brands continued to show improving momentum in Q1 2026 despite high comparables, with professional sportswear sub-categories leading in sales growth. ANTA Sports Products Ltd. delivered better-than-expected results, benefiting from its multi-brand strategy and expense control. In Q1, the ANTA brand achieved high single-digit growth, FILA saw mid-teens percentage growth, and other brands grew by 40-45%, accelerating from Q4 2025. Li Ning Company Ltd. reported profits exceeding expectations, with its adult channel all-channel sales growing at a mid-single-digit percentage rate year-on-year in Q1, while Li Ning YOUNG maintained double-digit growth. Xtep International Holdings Ltd. met performance expectations, with its main brand's all-channel sales growing at a low single-digit percentage rate, while the Saucony brand grew over 20%. 361 Degrees International Ltd. continued to lead, with its main brand and kids' wear offline sales both achieving approximately 10% year-on-year growth, and e-commerce sales growing at a mid-teens percentage rate.

Potential Risks to Consider

The report concludes by highlighting several potential risks, including global demand growth falling short of expectations, challenges in brand inventory reduction, intensifying industry competition, and uncertainties in global trade.