Global sportswear giants delivered mixed quarterly results, yet a clear recovery in Chinese athletic footwear and apparel consumption is emerging as a strategic linchpin for international labels, according to a research report from Shenwan Hongyuan Group Co.,Ltd. (SWHY).
Retail sales of clothing, footwear, hats, and knitwear in China reached RMB 961.5 billion in the first eight months of the year, up 5.1% year-on-year, outpacing the 1.1% growth in overall social retail sales. This momentum underscores a steady improvement in the sector's vitality.
Against a backdrop of sluggish North American demand and intense discounting in Europe, global brands are increasingly pivoting toward Greater China as their core growth engine, deepening localised operations across distribution, product development, and marketing.
Where the divergence lies
In the latest fiscal quarter, revenue growth varied sharply among key players: On climbed 13.5%, Adidas rose 13.3%, Deckers advanced 5.7%, while Nike, Lululemon, VF, and Puma declined 1.1%, 4.3%, 5.2%, and 9.7%, respectively. Net profit trends also diverged, with Adidas achieving a record quarterly revenue, buoyed by World Cup-related momentum, and Nike posting a 406.6% profit surge, largely due to a USD 986 million tariff rebate under IEEPA.
China's recovery takes centre stage
Domestic consumption of athletic footwear and apparel is firmly on a recovery track. Among international names, Adidas, Lululemon, and Puma all recorded positive sales growth in Greater China in their latest quarters, with only Nike continuing to suffer from ongoing channel restructuring.
Local brands are also showing resilience. In the second quarter of 2026, Anta Sports' multi-brand portfolio performed steadily, with its core label and FILA growing by low single digits, while other brands expanded 25%–30%. Li Ning and Xtep saw some revenue dips due to extreme weather, but 361 Degrees held firm, collectively demonstrating growth above the industry average.
Strategic tilt toward localisation
International brands are setting higher growth targets for Greater China, independent of global forecasts. Lululemon projects a 5%–7% decline in global revenue for FY26, yet expects high single-digit growth in mainland China for the full year, underscoring its strategic priority. On, despite trimming its global growth guidance to the low 20% range, saw Asia-Pacific (including Greater China) revenue jump 43.0% year-on-year in Q2, the fastest of any region, and continues to boost resource allocation there.
Channel strategies are also being localised. Lululemon has net-opened 15 new stores in Greater China since Q2 2025, one of the few markets still rapidly expanding. Puma is focusing on direct-to-consumer and e-commerce channels, with strong results during the 618 shopping festival. Nike, meanwhile, is bringing distributor-operated online channels back under its direct control to better manage pricing, product mix, and customer data.
Product and marketing efforts are being tailored to local tastes and sporting events. Adidas and Nike have launched China-specific football collections tied to the World Cup, driving significant sales in the category. Deckers' UGG brand is extending beyond traditional seasonal boundaries in China, introducing lifestyle footwear to sustain year-round demand.
Investment implications
With domestic apparel retail recovering and most sportswear brands posting strong Greater China results, the brokerage recommends focusing on the sporting supply chain. Key beneficiaries include global supply chain manufacturers such as Weixing, Bailong Oriental, Shenzhou International, and Huali Group, as well as sports and outdoor brands like Anta Sports, Li Ning, 361 Degrees, and Bosideng. The report also flags potential in outdoor leisure names.
Risks highlighted include weaker-than-expected global demand, inventory destocking by brands, intensifying competition, and global trade uncertainties.