The domestic sportswear industry delivered a mixed performance in the first half of 2026, as the sector's overall expansion coincided with intensifying brand divergence. Third-party data shows that retail sales of sports products on major e-commerce platforms reached RMB 230.575 billion in the period, up 14.2% year-on-year, significantly outpacing the growth rate of national online retail sales. The broader athletic footwear and apparel retail sector generated RMB 80.66 billion in total revenue, a 7.5% increase, while attributable net profit climbed 23.9% to RMB 13.29 billion.

However, this industry-wide momentum has not been uniformly distributed across brands. Among the four major domestic sportswear companies, ANTA Sports continued to lead with RMB 43.507 billion in revenue and 12.9% growth, while Li Ning posted RMB 15.235 billion in revenue, up 2.8%. 361 Degrees achieved RMB 6.16 billion in revenue, rising 8.0%. By contrast, XTEP INT'L (ASX: 01368) reported RMB 6.795 billion in revenue, a 0.6% decline, with attributable net profit falling 10.5% to RMB 818 million — making it the only one of the four domestic brands to record simultaneous declines in both revenue and profit.

On the revenue front, ANTA Sports maintained its dominant position with RMB 43.507 billion in turnover, surpassing the combined total of Li Ning, XTEP INT'L, and 361 Degrees. Li Ning ranked second with RMB 15.235 billion, growing 2.8% year-on-year. XTEP INT'L and 361 Degrees formed the second tier with similar revenue scales, though their growth trajectories moved in opposite directions.

The profit picture revealed a pivotal shift. 361 Degrees recorded attributable net profit of RMB 926 million in the first half, up 8.0%, overtaking XTEP INT'L 's RMB 818 million, which declined 10.5%. Notably, 361 Degrees achieved a perfect alignment between its 8.0% revenue growth and 8.0% profit growth, demonstrating strong earnings quality. In contrast, XTEP INT'L experienced only a marginal 0.6% revenue dip, yet its profit contracted by 10.5% — a disproportionately larger decline that underscores significant margin pressure.

Where the weakness originates

The core drag on XTEP INT'L 's performance stems from its flagship brand. The mass-market sports segment, anchored by the Xtep brand, generated RMB 5.92 billion in first-half revenue, down 2.2% year-on-year, with its share of total revenue falling to 87.1%. Operating profit for this division slipped 7.3% to RMB 1.12 billion, while the operating margin contracted from 20.0% to 18.9%. This marks the first half-year revenue decline for the Xtep core brand in recent years.

By product category, footwear revenue held relatively firm at RMB 4.272 billion, up 2.8%, indicating resilience in the running shoe franchise. However, apparel sales dropped 5.9% to RMB 2.402 billion, and accessories fell 7.8%, with the contraction in non-footwear categories weighing heavily on overall performance.

XTEP INT'L attributed the main brand's slowdown to two factors: rising logistics costs and e-commerce platform fees associated with its growing online business, and increased expenses related to its accelerated transition toward a direct-to-consumer (DTC) model. During the period, selling and distribution expenses climbed to 24.7% of revenue, up from 21.7% a year earlier, amounting to RMB 1.676 billion in absolute terms. Group-wide operating profit declined 11.0% year-on-year.

Operational efficiency also deteriorated. Inventory turnover days lengthened from 91 to 105 days, with inventory balances swelling 26% from RMB 1.829 billion to RMB 2.307 billion. Receivables turnover days extended from 118 to 123 days. By comparison, Li Ning maintained a leaner 65-day inventory turnover, while 361 Degrees improved from 117 days at the end of 2025 to 102 days — both clearly outperforming XTEP INT'L 's 105 days.

Distribution channels contracted as well. As of June 30, 2026, XTEP INT'L operated 6,308 adult stores, a net reduction of 49 stores from the end of 2025, alongside 1,455 children's stores, down 33 stores — a combined net closure of 82 outlets.

The decelerating second growth curve

Meanwhile, XTEP INT'L 's long-cultivated second growth engine — the professional sports division anchored by Saucony and Merrell — posted RMB 875 million in first-half revenue, up 11.4%, with its share of group revenue rising to 12.9%. The segment boasted a robust 55.5% gross margin, and operating profit grew 15.5% to RMB 91 million, making it the highest-quality growth driver within the group.

Yet this second curve is visibly losing momentum. From 2021 to 2023, the professional sports division's revenue surged from RMB 201 million to RMB 796 million, with near-doubling growth for two consecutive years. By the first half of 2026, however, segment growth had cooled to just 11.4%. Saucony's retail sell-through decelerated sharply, from over 20% growth in the first quarter to low single-digit growth in the second quarter.

This slowdown reflects both the natural fading of the low-base effect and intensifying competitive pressures. The premium professional running shoe segment where Saucony competes has become increasingly crowded: domestic brands like Li Ning and ANTA Sports continue to push upward, while international players such as HOKA and On maintain a firm grip on middle-class consumers, diverting target customers across both performance running and everyday lifestyle scenarios.