Here's a riddle: what do you do when you're a Chinese sportswear brand stuck between premium giants like Anta and budget warriors fighting over price-conscious shoppers? If you're 361 Degrees International Ltd. (1361.HK), apparently you just keep jogging at your own pace.
While China's broader athletic apparel market stumbles through fragile consumer sentiment, this retailer of running shoes and kids' sports gear managed to post stable double-digit growth in its core sales for the fourth quarter of 2025. That's not supposed to happen when wallets are tight.
Finding the Sweet Spot
According to the company's quarterly update, offline sales of its main 361 Degrees brand and children's sportswear lines climbed about 10% compared to the same period last year. E-commerce did even better, with gross merchandise value growing at what the company called "high double digits." This isn't just one good quarter either—first-half results showed revenue up 11% to nearly 5.71 billion yuan ($817 million), with profits rising 8.6% to 858 million yuan.
Compare that to the competition. Anta (2020.HK) saw revenues rise around 14% but net profit dropped 8.9%, with growth in its flagship brand slowing to mid-single digits. Li Ning (2331.HK) barely scraped out 3.3% revenue growth while net profit fell nearly 11%, hammered by discounting and weak demand. Xtep (1368.HK) managed a 7.1% revenue increase and a more than 20% jump in net profit, but that was mostly from niche brands like Saucony—its core label grew only in the low-to-mid single digits.
The pattern is clear: this isn't a market-wide recovery. Instead, 361 Degrees seems to have found its rhythm while everyone else is either racing upmarket or slashing prices to survive.
Performance Without the Premium Price Tag
The strategy shift happened gradually. Rather than competing purely on affordability, 361 Degrees focused on specialist categories like running and basketball, targeting the mid-priced segment with actual performance credentials. The company incorporated carbon-based technologies in its athletics shoes and developed more professional basketball offerings, backed by competitive events and athlete endorsements.
The goal? Build a loyal customer base that wants performance products but doesn't want to pay Anta or Li Ning prices. It's the Goldilocks zone of sportswear—not too cheap, not too expensive, just functional enough to justify the cost.
On the digital front, 361 Degrees tweaked its e-commerce approach away from clearance sales and frenzied promotional events. Instead, it's prioritizing exclusive products and content-based marketing. The fact that online sales kept growing in double digits through the third and fourth quarters—outside traditional peak shopping seasons—suggests this shift is actually working.
Super Stores and Steady Kids' Sales
Offline, the company has been rolling out super stores with footprints exceeding 1,000 square meters. By the end of last year, it operated 126 of these across China, mostly multi-functional outlets supplemented by standalone children's sportswear stores. This family-focused strategy matters because it diversifies product mix beyond single hero items or promotion-dependent sales cycles.
The children's sportswear business acts as ballast for the whole operation. Parents keep buying sports clothing for kids regardless of economic wobbles—it's closer to essential spending than discretionary splurges. In the fourth quarter, offline sales for the children's range rose about 10%, matching the core brand and smoothing out revenue volatility from the adult market.
In the first half, gross margin held above 41%, though operating margin got squeezed by higher spending on R&D, brand marketing, and channel expansion. The company is still in investment mode—ramping up stores, securing endorsements, developing new products—so the full margin payoff hasn't materialized yet.
Valuation Gap Worth Watching
Shares in 361 Degrees dipped about 0.34% on the day the operating update dropped, but the stock has climbed roughly 17% over the past six months, outperforming the broader market. Investors seem to be slowly reassessing the company's fundamentals, though the underlying business transformation might not be fully reflected in the price yet.
Right now, 361 Degrees trades at a forward price-to-earnings ratio of roughly 8.7 times. That's below Xtep at 9.8 times, well below Anta at 14.7 times, and nowhere near Li Ning at 16.3 times. This relatively conservative valuation provides some downside protection. If earnings keep growing and cash flow improves, the company could draw more investor attention over time.
The broader takeaway? In a market where consumer spending is fragile and brands are diverging sharply between premium and budget, 361 Degrees found a middle path that's actually generating growth. Whether that momentum continues depends on execution—store rollouts, product development, online engagement—but for now, the company is running at a pace its bigger rivals can't seem to match.
