Fiscal 2026 interim results for 361 Degrees have been released, showcasing robust core financial metrics that underscore the company's operational resilience and growth fundamentals against a backdrop of softening consumer demand and slowing sector momentum in the second quarter.
The company reported first-half revenue of RMB 6.16 billion, marking an 8% year-on-year increase. Gross profit reached RMB 2.57 billion, up 8.7% from the prior year period, delivering growth across both top-line and profitability measures. Net operating cash inflows for the period totaled RMB 610 million, a 17% improvement year-on-year, supporting the company's commitment to consistent shareholder returns. The interim dividend payout ratio stands at 45%, signaling continued value creation for investors.
A resilient growth model navigating sector-wide pressures saw 361 Degrees achieve gains across multiple fronts despite a challenging first half. Industry growth divergence intensified during the period, particularly in the second quarter, as domestic consumption momentum weakened and consumer discretionary spending on apparel contracted. Physical retail foot traffic recovery fell short of market expectations, with the sportswear segment's overall growth decelerating to low single digits. Many domestic brands grappled with elevated inventory levels and promotional pricing wars, which compressed industry-wide profit margins. Broker tracking data indicated sequential declines in industry sales metrics during Q2 across most players.
Against this backdrop, 361 Degrees capitalized on its forward-looking strategies to deliver standout operating performance, validating a growth trajectory that balances cyclical resilience with sustainability. Segment analysis reveals international operations emerged as a key growth driver, with both retail sales and cross-border e-commerce sales achieving double-digit expansion. The e-commerce division maintained its differentiated product strategy, improving both revenue scale and operational efficiency during the period. The children's business sustained steady growth with notable efficiency enhancements. The company also strengthened its omnichannel capabilities through its proprietary "1+6" new retail model, which boosted instant retail sales, complemented by distinctive physical store positioning across its network.
These better-than-expected results reflect the maturation of three core strategic pillars: globalization, digital transformation of sales channels, and deep penetration of specialized market segments. The company's long-term operational discipline and forward-looking strategic vision have enabled it to chart an independent growth course through the industry's adjustment cycle.
Globalization efforts continue to advance, with the company's operating model now successfully validated in overseas markets. International retail sales surged 80% year-on-year, while cross-border e-commerce sales jumped 140%, establishing overseas expansion as a formidable new growth engine. Building on 18 years of partnership with the Olympic Council of Asia, 361 Degrees has supported five consecutive Asian Games editions and will provide official sportswear for multiple roles at the 2026 Asian Games. The company's Nagoya Asian Games flagship store has opened, strengthening brand penetration across Asian markets. Concurrently, 361 Degrees maintains active participation in international running events including the Tokyo and Berlin Marathons, serves as a global partner to World Aquatics, and leverages partnerships with multiple National Olympic Committees and international basketball talent to build a comprehensive global sports resource network that underpins overseas revenue growth.
Channel evolution marks another key highlight of the interim report, with structural improvements in revenue contribution from both physical and digital channels. During the first half, the company completed a global store image upgrade program. As of June 2026, 361 Degrees operates 5,076 stores in mainland China, 2,202 children's stores nationwide, and over 188 global premium outlets. The Finnish high-end outdoor brand ONEWAY, acquired by the group, establishes a Nordic outdoor lifestyle benchmark that complements the main brand, contributing to differentiated and specialized physical retail positioning.
The company has positioned itself as a pioneer in digital innovation with its "1+6" new retail omnichannel operating model. In February, 361 Degrees formed a strategic partnership with JD Seconds to integrate instant retail capabilities, completing the onboarding of physical stores across six major online platforms. This comprehensive instant retail deployment enhances the company's digital sales infrastructure. The e-commerce division's differentiated product assortment strategy capitalizes on emerging consumer trends in tennis, badminton, and pickleball, generating fresh revenue streams. E-commerce turnover reached RMB 1.99 billion in the first half, up 9.5% year-on-year, representing 32.3% of total group revenue, demonstrating sustained high-base growth in online sales.
Product technology remains the foundational competitiveness driving revenue expansion. R&D investment accounted for 2.9% of revenue in the first half, with cumulative patents surpassing 1,506. The company's technology-driven footwear lines, including the Feiran, JOKER, and Lingci models, continue to evolve, transferring elite international competition technology to mass-market products and generating incremental sales. Proprietary event properties such as the "3rd Track," "Touch to Ignite," "Women's Fitness Club," and "Perfect Match" continue to engage consumers, while expansion into new sports scenarios including trail running and outdoor activities broadens the consumer base and drives category-wide growth.
The children's business segment has reached a new milestone. The company completed its full-age product matrix with multiple exclusive children's technology products launched during the period. Event sponsorship intensified with title sponsorship of the 2026 Asian Jump Rope Championships, attracting youth participation and driving children's apparel sales through physical channels. The national children's store network expanded to 2,202 locations, creating mutual traffic flow with main brand stores. Digital marketing effectiveness delivered significant results, with the brand achieving the fastest category growth on its Tmall debut during a "Joy Day" promotion, consistently contributing stable revenue increments.
Evaluating the complete set of revenue, profitability, and operational metrics against the sector's Q2 headwinds, 361 Degrees' performance combining steady revenue growth with multi-segment expansion stands out as exceptional. Globalization lifts the revenue ceiling, digital channel transformation enhances turnover efficiency, the children's business provides stable cash flow generation, and emerging segments extend long-term growth potential. These multiple engines collectively construct a counter-cyclical revenue growth framework.
As the era of rough expansion in the sportswear industry concludes, volume-driven pricing strategies prove unsustainable, and competition reverts to fundamentals in product, channel, and global capabilities. Going forward, 361 Degrees will continue strengthening its brand positioning around professionalism, youth appeal, and international presence, steadily executing strategic initiatives. With continued focus on technological innovation and brand building, deep development of core categories, expansion into high-potential emerging markets, and accelerated penetration of specialized scenarios, the company is well-positioned to capitalize on sporting event dividends, premium store expansion plans, and integrated online-offline synergies. Its growth potential is poised for further release, warranting sustained positive outlook on long-term value creation.