Latest news for 361 Degrees Intl (OTC:TSIOF) Stock

361 Degrees International Ltd is a Chinese manufacturer of sporting goods. The company produces sporting goods. Its segments include adults and kids. 361 Degrees International reports revenue across four product lines: footwear, apparel, accessories, and others. Footwear and apparel are the important product lines, each contributing close to half the company's revenue, and the majority of sales are made across the adult segment. Adults-this segment derives revenue from manufacturing and trading of adult sporting goods. Kids- this segment derives revenue from the trading of kid's sporting goods. The company derives the majority of its revenue domestically.

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Key Takeaways:


	Anta said sales of its Fila branded products contracted in the third quarter as increasingly cautious Chinese consumers gravitated towards cheaper products
	Despite the Fila slowdown, analysts still expect the company’s revenue to grow 16% in the second half of the year, supported by sales of its other brands




China&#39;s &#39;Consumption Downgrade&#39; Trips Up Anta

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Key Takeaways:


	361 Degrees said its kids-branded products business rose by ‘mid-single-digits’ in its latest quarterly business update, down from earlier recent growth rates
	Retail sales for the sportswear maker’s core brand grew 10% year-on-year in the three months to June


By Lau Chi Hang

Is 361 Degrees&#39; Kid Power Losing Momentum?

361 DEGREES INTL LTD by 361 Degrees International Limited

361 Degrees International Ltd

361 Degrees International (HK:1361) has released an update. 361 Degrees International Limited has announced changes in its executive team, with Mr....

361 Degrees International Announces Executive Changes

361 Degrees International (HK:1361) has released an update. 361 Degrees International reported a robust performance in Q2 2024, with its core brand...

361 Degrees International's Soaring Q2 2024 Growth

361 Degrees International (HK:1361) has released an update. 361 Degrees International Limited has announced a board meeting scheduled for August 12...

361 Degrees International Plans Board Meeting

361 Degrees International (HK:1361) has released an update. 361 Degrees International Limited has released its unaudited interim financial results ...

361 Degrees International Reports 2024 Interim Results

In a report released today, Walter Woo from CMB International Securities maintained a Buy rating on 361 Degrees International (TSIOF – Research Rep...

361 Degrees International: A Buoyant Buy Amidst Sector Resilience and Attractive Valuation

361 Degrees International (HK:1361) has released an update. 361 Degrees International Limited reports a robust 10% growth in retail sales for both ...

361 Degrees Reports Strong Q3 Growth and Milestones

361 Degrees International (HK:1361) has released an update. 361 Degrees International has announced the appointment of Ms. Ferheen Mahomed as an in...

361 Degrees Welcomes New Board Member

361 Degrees International (HK:1361) has released an update. 361 Degrees International has announced its updated Board of Directors, including execu...

361 Degrees International Reveals Board Update

361 Degrees International (HK:1361) has released an update. 361 Degrees International has appointed Ms. Ferheen Mahomed as an independent non-execu...

361 Degrees International Enhances Board with New Director

An announcement from 361 Degrees International ( ($HK:1361) ) is now available. In the fourth quarter of 2024, 361 Degrees International reported a...

361 Degrees International Reports Strong Q4 2024 Sales and Strategic Brand Expansion

361 Degrees Intl

<h4>Key Takeaways:</h4>

<ul>
	<li>Anta said sales of its Fila branded products contracted in the third quarter as increasingly cautious Chinese consumers gravitated towards cheaper products</li>
	<li>Despite the Fila slowdown, analysts still expect the company&rsquo;s revenue to grow 16% in the second half of the year, supported by sales of its other brands</li>
</ul>

By Doug Young

Why purchase pricey foreign sportswear with names like Nike and Fila when you can get the same products from domestic brands like Anta or Li Ning for less?

That&rsquo;s the question shadowing&nbsp;Anta Sports Products Ltd.&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/ANPDY#OTC">ANPDY</a>), whose upscale Fila brand showed signs of slipping in the third quarter, according to the company&rsquo;s&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1010/2024101000298.pdf">latest quarterly update</a>&nbsp;issued last Thursday. More specifically, Anta reported its sales of Fila products, a Korean-owned brand that it sells in China under a licensing agreement, fell by a &ldquo;low single digit&rdquo; amount in the three months to September.

The third-quarter decline for Fila is quite significant, as the brand is one of Anta&rsquo;s most profitable, carrying higher margins than its core Anta brand. The Anta brand accounted for nearly half of the company&rsquo;s sales in the first half of the year, with Fila not far behind at nearly 40%. The rest, about 14%, comes from other upscale brands like Descent and Kolon Sport.

Fila&rsquo;s third-quarter sales decline contrasted with its performance in the first half of the year, when its revenue rose by 6.8%. Even then, Fila was a relative laggard to Anta&rsquo;s other two main brand groupings, with revenue from Anta-branded products up 13.5% and &ldquo;other products&rdquo; up 41.8% for the six-month period.

Investors got a bit spooked by the latest announcement, with Anta shares falling nearly 9% on Monday, the first trading day after the update. Despite that, the stock is still up 20% year-to-date, including a 30% gain in the last month amid a broader rally for Chinese stocks.

Anta is the largest, and an investor favorite, among China&rsquo;s sportswear makers, boasting a relatively high price-to-earnings (P/E) ratio of 18. By comparison, the next largest player,&nbsp;Li Ning&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/LNNGF#OTC">LNNGF</a>) trades at a lower 13, while smaller rival&nbsp;361 Degrees&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/TSIOF#OTC">TSIOF</a>) trades at just 8.

All of the retailers are coming under pressure these days as Chinese consumers rein in their spending with the country&rsquo;s slowing economy. Retail sales in China grew just 2.1% in August and 2.7% in July, far slower than rates seen in the past when the economy was booming.

A sub-story of the retail slowdown has been what&rsquo;s locally called a &ldquo;consumer downgrade,&rdquo; referring to the growing consumer preference for cheaper products over more expensive ones within individual categories. That downgrade is affecting everyone in the retail sector, with more upscale brands like Starbucks and Nike losing business to lower-priced rivals like Luckin Coffee and Anta.

Starbucks reported in July that its China same-store sales tumbled 14% in the three months to June, as the average size of an order fell 7%. Similarly,&nbsp;Topsports&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/TPSRF#OTC">TPSRF</a>), the main seller of Nike and Adidas shoes and sportswear in China, last month said its profit tumbled 35% in the first half of its fiscal year through August. It said its revenue also fell for the period, blaming dampened consumer sentiment that was affecting the entire retail sector. It added that its margins were also taking a hit from discounting and promotions, as well as inventory buildup as a result of slowing sales.

<h3>Tale Of Two Brands</h3>

With all that background in mind, we&rsquo;ll return to the story of Anta and the diverging paths between its original Anta-branded products and Fila, whose China rights it acquired more than a decade ago. In its latest financial report for the first half of this year, Anta refers to Fila as its &ldquo;high-end athletic fashion brand that targets high-end consumers across a wide range of age groups.&rdquo;

Fila&rsquo;s second-quarter sales decline contrasts with a mid-single digit sales increase for Anta-branded products during the period, according to the update. Here we should also note that even the Anta brand is facing some economic headwinds, since its latest growth represents a slowdown from the 13.5% year-on-year growth it recorded in the first half of the year.

Fila-branded products commanded a gross margin of 70.2% in the first half of the year, well ahead of the 56.6% for the Anta brand, reflecting Fila&rsquo;s premium nature and bigger contribution to the company&rsquo;s profits. That means the contraction of Fila sales in the third quarter is likely to pressure Anta&rsquo;s bottom line in the second half of the year, especially if the brand&rsquo;s sales continue to decline.

The story wasn&rsquo;t all bad for Anta, as its &ldquo;other products&rdquo; category, which also consists of more premium foreign brands, actually rose between 45% and 50% in the third quarter. That figure represents an acceleration from the category&rsquo;s 41.8% growth in the first half of the year, as Anta probably spends aggressively to promote these other premium brands like Descente and Kolon Sport.

Anta also has a positive story to tell in&nbsp;Amer Sports&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AS#NYSE">AS</a>), its foreign subsidiary based in Finland, which owns the Wilson and Arc&rsquo;teryx brands, and was spun off and separately listed in the U.S. early this year. Amer previously reported its revenue rose 14% in the first half of the year to $2.18 billion, powered by a 52% rise in its Greater China sales that accounted for about 10% of the total, as it leverages its Anta connections to grow in that market.

Amer&rsquo;s shares have also performed quite well since their IPO, and now trade about 50% above their listing price of $13.

Despite the contracting Fila sales, Anta is still expected to post revenue growth of about 16% in the second half of the year, boosted by stronger performance for its other brands, according to the average of 44 analysts polled by Yahoo Finance. That testifies to the company&rsquo;s strong management that has made it the leader in China&rsquo;s sportswear market.

The company&rsquo;s stock will probably continue to command a premium to its peers for its size and strong margins. But at the end of the day, even Anta can&rsquo;t stop the forces of a slowing Chinese economy and the growing consumer preference for cheaper domestic brands over pricier foreign ones.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

China's 'Consumption Downgrade' Trips Up Anta

<h4>Key Takeaways:</h4>

<ul>
	<li>361 Degrees said its kids-branded products business rose by &lsquo;mid-single-digits&rsquo; in its latest quarterly business update, down from earlier recent growth rates</li>
	<li>Retail sales for the sportswear maker&rsquo;s core brand grew 10% year-on-year in the three months to June</li>
</ul>

By Lau Chi Hang

As one of China&rsquo;s top four domestic sportswear brands,&nbsp;361 Degrees International&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/TSIOF#OTC">TSIOF</a>), though far smaller than leaders&nbsp;Anta&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/ANPDY#OTC">ANPDY</a>) and&nbsp;Li Ning&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/LNNGY#OTC">LNNGY</a>) and even closer rival&nbsp;Xtep&nbsp;(1368.HK), has been on an impressive roll these last few years. Its strong performance owes to a two-tiered strategy of expanding into smaller third-tier cities, while also building up its children&rsquo;s sportswear brand.

But after a strong run in the kids space, growth for that area appears to be slowing, based on what 361 Degrees said in its&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0712/2024071200039.pdf">latest operational update</a>&nbsp;for the second quarter. In the update, it said sales for its core branded products rose about 10% year-on-year for the three months to June, while its e-commerce sales jumped 30% to 35%. But the company failed to disclose similar specific growth figures for its kids-branded products, saying only the category &ldquo;recorded approximately mid-teens growth compared to the same period of 2023&rdquo;.

<h3>What Does Mid-Teens Mean?</h3>

So, what exactly is mid-teens growth, and why did 361 Degrees use this relatively vague description rather than being more specific? Longtime company watchers many notice the company tends to become vaguer when certain businesses are losing momentum.

That certainly seems to be the case here, since kids products have recorded year-on-year growth rates averaging in the 25% to 30% range during the past two years. So, the &ldquo;mid-teens&rdquo; growth from the latest quarter, or around 15%, would mark a significant slowdown from earlier rates.

The company has been expanding into the kids market since 2009 by building its own brand to focus on demand for sporting goods and equipment from children and teenagers. That hard work hasn&rsquo;t been wasted, as 361 Degrees turned the category into an important new revenue engine. Kids product sales more than doubled over just three years from 930 million yuan ($128 million) in 2020 to just shy of 2 billion yuan last year. It accomplished that feat through a big buildout of its kids specialty store network, which had 2,545 stores by the end of last year, up by 257 year-on-year.

But the kid magic has begun slowing in the last two quarters as Chinese consumers grow more cautious. The category grew between 20% and 25% in the first quarter, down sharply from the turbocharged 40% growth in last year&rsquo;s fourth quarter. And now the second-quarter growth looks set to fall further still to around 15%.

Still, it&rsquo;s probably too early to draw conclusions based on just two quarters. After all, any business has its ups and downs over the short-term. 361 Degrees has also logged cases where growth for its individual businesses slowed in a single quarter before picking up again. Thus, we&rsquo;ll need a bit more time before passing judgment on a potential kids slowdown.

<h3>Booming Kids Clothing Market</h3>

On a broader basis, China&rsquo;s kids clothing market is still full of potential, especially as living standards rise and Beijing encourages families to have more children after three decades of strictly enforcing a &ldquo;one child policy.&rdquo; What&rsquo;s more, Chinese parents are often willing to spend lavishly on their children despite reining in spending on themselves in the last two years as they sacrifice their own extra comfort for the sake of their children.

China&rsquo;s children&rsquo;s clothing market has been growing steadily in recent years, worth 256 billion yuan in 2021 and expected to growth 15.6% annually to reach 460 billion yuan by 2027, according to market research firm Euromonitor.

361 Degrees&rsquo; other businesses are also still performing well despite the kids product slowdown. Its overall retail sales have grown steadily over the past three years, with revenues rising from 5.93 billion yuan in 2021 to 8.42 billion yuan last year. Its profit rose from 600 million yuan to 960 million yuan over that period.

<h3>Tapping&nbsp;Undeveloped Areas</h3>

Founded in 2003 by Ding Jiantong, 361 Degrees has had to continually seek out areas to differentiate itself in the face of intense competition from both domestic and global rivals, from international giants like Adidas and Nike, to local favorites like Li Ning, Anta, Xtep, Peak and Guirenniao. That led management to carve out a niche by focusing on smaller third-tier cities about a decade into its development.

In its 2013 annual results, the company said it would focus on consolidating and developing such third-tier cities, as well as smaller cities in the low- and mid-end markets for the first time. By last year, 76% of its stores were located in such smaller cities, with only 5.1% in China&rsquo;s largest first-tier mega-cities like Beijing and Shanghai.

The company has also tailored its marketing campaigns to sync with that smaller-city focus, for example, by launching a &ldquo;Light Up&rdquo; campaign aimed at popularizing basketball culture in such centers, often called &ldquo;sunken cities&rdquo; in Chinese.

That move to smaller cities saw 361 Degrees follow up by focusing most of its resources on such centers, generating considerable revenue and profit in the process.

The approach of the 2024 Paris Olympics, set to start on July 26, could lift sporting stocks in the days and weeks ahead, which could give a short growth spurt to tickers like 361 Degrees. The company&rsquo;s current price-to-earnings (P/E) ratio of 7.8 trails major sports brands Anta and Li Ning, with ratios of 19 and 12, respectively. Even closer peer Xtep trades at a higher 12. That means 361 Degrees might be able to narrow the gap if it can continue to grow its profits, even if its kids category loses some momentum.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

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