XTEP INTERNATIONAL, which claims to be "China's leading running brand," delivered strong results for the first half of this year. During the reporting period, XTEP achieved revenue of 6.838 billion yuan (RMB, same unit below), up 7.1% year-on-year; profit attributable to ordinary shareholders reached 914 million yuan, up 21.5% year-on-year.

Although XTEP's revenue growth lagged behind that of 361 Degrees, which recently disclosed its half-year results, its profit performance significantly outpaced the latter. Following the earnings announcement at midday on August 18, XTEP's stock price surged in the afternoon session, closing up 7.33% and leading gains in Hong Kong's sportswear sector. The rally also lifted shares of ANTA Sports, Li Ning (02331.HK), and 361 Degrees.

**New Record Highs**

XTEP's first-half performance was impressive, with revenue, gross profit, net profit, and basic earnings per share all reaching new highs for a half-year report. After divesting fashion sports brands K-Swiss and Palladium last year, the drag on XTEP's profitability has been alleviated. According to its half-year report, the company's net profit margin reached 13.4%, up 1.6 percentage points year-on-year, demonstrating strong performance.

XTEP was generous in dividend distribution, setting its 2025 interim dividend at 18 HK cents per share, up 15.4% year-on-year, with a payout ratio of 50%.

XTEP operates two main business segments: mass market and professional sports. The mass market centers on the XTEP core brand, while professional sports encompasses Saucony and Merrell, forming a diversified brand matrix of "mass sports + professional sports."

In the first half of this year, mass market revenue continued moderate growth while professional sports revenue maintained rapid growth, up 4.5% and 32.5% respectively year-on-year. The professional sports segment's profit-generating capability improved rapidly, with operating profit of approximately 78.6 million yuan in the first half of 2025, surging over 230% year-on-year. This reflects the significant success of the company's brand premiumization strategy and improved operational efficiency.

During the first half of 2025, e-commerce remained XTEP's primary growth driver, achieving double-digit year-on-year growth and accounting for over 30% of XTEP's main brand revenue.

XTEP has long been enthusiastic about participating in marathon events to strengthen its brand positioning and enhance brand influence. The first half of this year saw continuous marathon fever domestically. According to China Marathon Platform data, on March 30 alone, 32 marathon events took place nationwide with 420,000 participants, setting a historic high. XTEP successfully benefited from this trend, with the company stating that it maintained the top marathon wearing rate in the first half of 2025.

Saucony ranked third in overall wearing rates at the 2025 Xiamen and Lanzhou events, and for the first time jumped to second place in overall wearing rates at the 2025 Wuxi event, surpassing all international brands.

**Saucony: Future Pillar?**

ANTA, which adopts a multi-brand strategy, has been thriving in recent years, with high-end brands like FILA successfully driving steady growth. XTEP's brand development strategy is similar to ANTA's, also implementing a multi-brand approach, though with fewer brands than ANTA.

Last year, XTEP divested loss-making brands K-Swiss and Palladium to strengthen competitiveness in the running sector and achieve business streamlining and focus.

Just as FILA is to ANTA, Saucony, known as the "Rolls-Royce of running shoes," represents XTEP's important channel for testing premium markets and a key step in enhancing professional brand mindshare.

As XTEP's first new brand to achieve profitability, Saucony continued to show strong growth potential in the first half of this year. During the first half of 2025, Saucony retail sales recorded over 30% growth.

XTEP also intensified Saucony's expansion efforts. As of June 30, 2025, Saucony operated 155 stores in mainland China, up 27 from 128 stores in the same period last year.

XTEP also indicated that in the second half of 2025, it will open new Saucony flagship stores and concept stores in core commercial districts and expand apparel and lifestyle product lines.

Unlike the main XTEP brand, Saucony focuses on functionality and targets first- and second-tier cities. Similar to ANTA's acquisition of FILA, XTEP is operating premium brands to enter high-tier urban consumer groups and create new growth curves.

XTEP Group President Tian Zhong stated at the earnings conference that Saucony will appropriately accelerate offline expansion, focusing on high-quality commercial districts in first- and second-tier cities, while appropriately reducing online low-priced, heavily discounted products.

Galaxy Securities stated in its latest research report that from 2020-2024, high-performance running shoe brands with relatively high recognition in the domestic market have all achieved growth rates higher than industry averages in recent years. Saucony's scale is relatively small, presenting significant growth potential.