Goldman Sachs has released a research report stating that XTEP INT'L (01368) core brand third-quarter retail sales were broadly in line with expectations. The bank has lowered its net profit forecasts for 2026 to 2028 by 1% to 2%, and slightly reduced its target price from HK$5.4 to HK$5.3, maintaining a "Buy" rating.
XTEP INT'L (01368) recorded a mid-single-digit year-on-year decline in third-quarter retail sales for its core Xtep brand, compared to a mid-single-digit year-on-year increase in the previous quarter. Saucony improved from a low-single-digit year-on-year increase in the second quarter to a mid-single-digit year-on-year increase. The bank believes that the core brand's third-quarter retail sales were broadly in line with its expectation of approximately a 6% year-on-year decline in the second half, though Saucony slightly fell short of the bank's original forecast of approximately a 9% year-on-year increase in the second half.
The bank noted that Mid-Autumn Festival and National Day sales performance was in line with company expectations, with October trends broadly similar to the third quarter. Consumers remain cautious, and warmer weather also weighed on winter apparel sales. During the period, Xtep discounts were broadly flat, Saucony maintained prudent discounts, and inventory levels for both brands remained healthy. Management maintained its full-year 2026 guidance, expecting a low-single-digit year-on-year decline in revenue, a high-single-digit net profit margin, approximately 10% revenue growth for Saucony and Merrell, an operating profit margin no lower than 2025 levels, and a full-year dividend payout ratio of no less than 50%.
The bank lowered its revenue forecasts for Xtep for 2026 to 2028 by less than 1%, mainly reflecting weaker Saucony sales. The bank believes that valuation is not high and the dividend yield is expected to reach a high-single-digit level.
Comments