Looking back at the first half of 2026, mid-to-high-end personalized brands have shown strong performance, while mass-market consumption has been relatively weak, and leading manufacturers have faced pressure on orders.

Looking ahead to the second half of the year, mid-to-high-end brands with channel advantages, distinctive products, and strong customer relationship management capabilities are expected to maintain their edge. On the manufacturing side, demand and cost pressures are expected to bottom out. It is advisable to monitor the potential demand catalyst from the World Cup and the profit elasticity anticipated for 2027.

Apparel Brands

Performance ranking for the year so far: Mid-to-High-End Outdoor > Mid-to-High-End Casual > Mid-to-High-End Women's Wear > Mass-Market Sportswear & Footwear > Home Textiles.

Mid-to-High-End Outdoor: In Q1 2026, high-end outdoor and sportswear fashion brands continued their strong momentum. ON grew over 60% in the Asia-Pacific region (even faster in China), while KOLON and DESCENTE saw growth exceeding 40%, and Amer Sports' Greater China region grew over 45%.

Mid-to-High-End Casual: Achieved high-single-digit or above growth in 2025 (e.g., BIEM.L.FDLKK revenue +7.7% YoY, HAZZYS brand +8.0%, Ralph Lauren Q4 2025 Mainland China revenue +20-30% YoY). Growth accelerated in Q1 2026 (e.g., BIEM.L.FDLKK +18.4%, Saint Angelo +10.5%, Ralph Lauren Mainland China +30%+).

Mid-to-High-End Women's Wear: For the six months ended December 2025, JNBY and LESS brands under JNBY Group reported revenue growth of +5.7% and +16.3% YoY, respectively. Since the start of calendar year 2026, they have achieved high-single-digit and double-digit growth, respectively. International mid-to-high-end women's wear brands under Ellassay—Laurèl, self-portrait, and IRO (China)—reported 2025 revenue growth of +12.8%, +16.2%, and +14.9% YoY, respectively. In Q1 2026, growth accelerated to +32.4%, +12.8%, and +32.4% YoY, respectively, with double-digit growth expected for the full year 2026.

Mass-Market Sportswear: For Q1 2026, Li Ning, ANTA Sports brand, and Xtep brand reported mid-single-digit, high-single-digit, and low-single-digit growth in retail sales value, respectively. It is projected that Li Ning will achieve mid-single-digit revenue growth for 2026, ANTA Sports brand low-single-digit retail sales growth, and Xtep brand some revenue growth, indicating overall stable performance.

Home Textiles: Achieved mid-to-high-single-digit growth in 2025 (e.g., Mercury +8.0%, LUOLAI +6.1%). Growth moderated slightly in Q1 2026 (Mercury +5.7%, LUOLAI +5.9%).

Key Drivers

The recovery in mid-to-high-end consumption willingness is attributed to brands possessing channel advantages, product differentiation, and customer relationship management capabilities.

Property prices in first- and second-tier cities have stabilized, coupled with structural gains in the stock market in H1 creating a wealth effect, boosting consumption willingness among middle-class and high-net-worth individuals for mid-to-high-end brands.

Mid-to-high-end brands generate their own traffic online and occupy prime locations in core commercial districts offline, also operating multi-brand stores.

Product design emphasizes differentiation, with mid-to-high-end outdoor, casual, and women's wear focusing on fabric functionality and aesthetics.

Mid-to-high-end outdoor brands offer rich community activities, while women's wear brands explore new retail strategies to deepen member value and enhance customer loyalty.

Textile Manufacturing

Operations are expected to bottom out in 2026, with focus on World Cup catalysts and 2027 profit elasticity.

Demand Side: Since Q4 2025, leading manufacturers have faced overall order pressure. U.S. apparel retail demand growth slowed from high-single digits to mid-single digits in H1 2026, with weak restocking意愿 from European and American distributors. Manufacturing monthly revenue indicates weak orders since Q4 2025. It is crucial to monitor new developments in demand, particularly the World Cup catalyst. The expanded World Cup format, combined with strong local consumption power in host region North America and high brand exposure, is expected to boost demand for football footwear/apparel, jerseys, retro sportswear, and related products. Referencing the Samba trend (which drove over 50% market cap growth for companies like Adidas, ASICS, Huali Group, and Yue Yuen in 2024), if the World Cup sparks a new sportswear trend, it could create synergy between brand sales and manufacturing orders.

Cost Side: Following geopolitical tensions, prices for chemical fibers and cotton rose significantly from late February to March but have retreated since Q2. Raw materials account for about 70% of yarn production costs and 50-65% for fabric and garment production, making upstream segments more sensitive to raw material prices. Manufacturers benefited from low-cost raw material inventories in Q1. Costs in Q2 and Q3 are expected to gradually rise with new raw material procurement, but pressure should ease from Q4 onwards as geopolitical tensions potentially moderate and new orders are repriced, releasing profit elasticity.

Investment Recommendations

Dividend Portfolio: Recommended stocks include Youngor Group (traditional apparel brands bottoming, new brands like HH growing rapidly, real estate business deleveraging, stable investment returns, ~5% dividend yield), JNBY Group (sustained growth across mid-to-high-end women's and children's wear multi-brands, ~7% dividend yield), and Hangmin Co.,Ltd (stable dyeing business, improving profit margins in gold processing, ~5% dividend yield).

Stable Growth Portfolio: Recommended stocks include Li Ning (projected mid-single-digit revenue growth for 2026, new product cycles from 2026-2028 may boost margins), ANTA Sports (mid-to-high-end outdoor brands maintaining rapid growth; PUMA could benefit if football-related styles become trendy), LUOLAI (optimizing channel inventory, improving margins, ~100% payout ratio), and Mercury (advancing core product strategy, improving margins, 60%+ payout ratio).

Profit Recovery & Elasticity Portfolio: Recommended stocks include Shenzhou International (close collaboration with Adidas on football apparel, major clients include NIKE and Adidas), Crystal International (close collaboration with sportswear brands, high North American export exposure), Yue Yuen (some collaboration on football products, low valuation), and Huali Group (potential beneficiaries from Adidas, ON, and New Balance).

Risk Factors

Risks include fluctuations in raw material prices; weaker-than-expected overseas demand leading to poor manufacturing order intake; insufficient consumer purchasing power pressuring brand sales; and inventory impairment risks.