Shares of XTEP INT'L (HKEX: 01368) fell more than 4%, hitting a low of HK$3.65, marking its weakest level since August 2024.

At the time of writing, the stock was down 4.44% to HK$3.66, with a trading turnover of HK$36.51 million.

The decline follows a research report from Daiwa Capital Markets, which highlighted potential challenges for the company's core brand. According to the report, the latest channel checks indicate a sequential slowdown in the retail sales value for the sportswear industry in the second quarter of this year.

Increased month-to-month volatility in retail sales value has further reduced short-term predictability for XTEP.

Daiwa also noted that the transformation of XTEP's core brand could disrupt its wholesale sales business and require upfront investment, potentially diluting short-term revenue and profit margins.

While the Saucony brand is expected to maintain its high growth trajectory, the core XTEP brand may face challenges from slowing growth and intensifying competition.

Consequently, Daiwa lowered its earnings per share forecast for XTEP this year by approximately 12%. The firm also reduced its target price from HK$5.2 to HK$3.9 and downgraded its rating from "outperform" to "hold".