Goldman Sachs China Sportswear: 1H26 Results and ALC Debrief — Demand Divergence, Margin Pressure, and the Next Growth Frontier
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Goldman Sachs reviewed 1H26 results for covered China sportswear brands and distributors: outcomes were 'better than feared' but second-half guidance diverged. Anta Sports' core net profit beat and full-year guidance was maintained (Anta brand/Fila/other brands: +LSD%/+MSD%/>20% retail growth); Li-Ning's net profit beat but full-year sales and margin guidance was cut (revenue growth lowered from high-single-digit to low-single-digit); Xtep's net profit slightly beat, yet full-year sales guidance was reduced (group from +MSD% to -LSD%; Saucony from +20-30% to ~+10%). Growth is increasingly bifurcated: premium and professional brands outpace mass brands, online beats offline, and offline traffic shifts from street stores toward malls and outlets. Discount pressure should persist, with Nike's channel clean-up potentially deepening discounts around Double 11 (Nike China 1Q/2Q sales -10%/-17% yoy), though its long-term premiumization could restore pricing discipline. Gross margins mostly beat: Anta Group +0.4pp above estimates (+0.5pp yoy), Li-Ning +0.9pp yoy, Xtep Group +1.5pp yoy, Pou Sheng +0.9pp in 1Q, while Topsport fell 0.7pp yoy, 1.2pp below estimates. Goldman Sachs prefers Anta (Buy, target HK$108, 18x 2027E P/E discounted at 11% CoE); Li-Ning (Buy, HK$19.50), Xtep (Buy, HK$5.4, 11x 2026E P/E) and Pou Sheng (Buy, HK$0.54, 7x 2027E P/E); Topsport is Neutral (HK$1.2, 8x FY2/28E P/E).
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