The once iconic slogan "XTEP, non-generic feeling," popularized by endorser Nicholas Tse, now seems to reflect a different reality: non-generic growth anxieties.
On March 27, XTEP INT'L (01368.HK) saw its stock price decline at the opening, dropping over 5% intraday. This followed a significant drop the previous day (March 26), where the share price fell more than 9% after the company released its 2025 results, hitting a near one-year low. The stock closed the day down 7%. Despite reporting a financial statement showing revenue of 14.15 billion yuan and a net profit of 1.372 billion yuan—both indicating growth—why did investors respond negatively?
The core pillar of the business showed a significant slowdown, with growth of just 1.5%. The financial report revealed that for the period ending December 31, 2025, XTEP INT'L's revenue increased 4.2% year-over-year to 14.151 billion yuan. Profit attributable to ordinary equity holders grew 10.8% to 1.372 billion yuan. The company attributed this growth to the "steady performance of the core XTEP brand" and "strong growth in the professional sports segment."
However, in 2025, revenue from the core XTEP brand increased by only 1.5% year-over-year, marking the lowest growth rate in recent years. This compares to 3.2% growth in 2024 and double-digit growth in prior periods. Retail sell-through maintained low single-digit growth, nearly stalling in the fourth quarter. As the core XTEP brand contributes over 88% of the group's revenue, its slowdown directly dragged down overall performance. The reported revenue of 14.15 billion yuan fell short of market expectations of 14.38 billion yuan, while the net profit of 1.372 billion yuan also missed estimates.
The company is aware of the challenges. The running segment has become a fiercely competitive market, with rivals like Anta, Li Ning, and 361 Degrees intensifying their efforts, diluting XTEP's historical advantage in professional running. On the product front, while competitors have iterated carbon plate running shoes multiple times, the core XTEP brand still relies mainly on traditional running shoes, lacking breakthrough technology. In terms of channels, distributor inventory turnover days extended from 4 months to 4.5 months, indicating reduced willingness to purchase and hindering market penetration.
Saucony, while a bright spot, cannot single-handedly support the group. With the core brand's sluggish performance, the highlight came from the professional sports segment—comprising Saucony and Merrell. This segment's revenue grew 30.8% year-over-year in 2025, reaching 1.636 billion yuan.
A key factor behind this was an acquisition two years prior. At the end of 2023, XTEP acquired the remaining equity in the Saucony China joint venture for $61 million, making it a wholly-owned subsidiary. Saucony now operates 175 stores in mainland China and leads in wearer percentage at six major marathon events, including those in Shanghai, Beijing, and Xiamen.
Nevertheless, Saucony is not yet in a position to rescue XTEP's overall situation. Its revenue of 1.636 billion yuan constitutes only 11.6% of the group's total revenue. A segment representing less than 12% of the business is insufficient to fill the growth gap left by the core brand, which accounts for nearly 90% of revenue. Furthermore, Saucony's channel density is far lower than the core brand's—175 stores compared to over 6,000—limiting its market coverage.
A more concerning trend is the decline in gross profit margin alongside rapid growth. The professional sports segment's gross margin fell from 57.2% to 55.5%, a decrease of nearly 2 percentage points. The group attributed this to a "greater contribution from apparel sales, which have a lower gross margin compared to footwear." This implies that Saucony's growth is increasingly reliant on the apparel category, which is less profitable than shoes.
Pressure on profit margins and extended collection periods are diminishing earnings quality. Not only the professional sports segment but also the mass sports segment saw its gross margin slightly decrease from 41.8% to 41.2%. The overall decline in gross margin directly compressed net profit space—the net profit growth rate of 10.8% was 4.2 percentage points lower than the revenue growth rate.
Compared to peers, XTEP's gross margin is at a distinct disadvantage. In the first half of 2025, Li Ning reported a gross margin of 50%, while Anta's was as high as 62.17%. This margin gap highlights deficiencies in product pricing power and cost control capabilities.
Another financial concern is the accounts receivable turnover days. This figure reached 126 days in the first half of 2025, far exceeding peers like Anta (20-26 days) and Li Ning (13-15 days). A longer collection cycle indicates pressure on cash flow—net cash generated from operating activities decreased by 6.37% year-over-year. More seriously, excessively long payment terms could strain distributors' capital turnover, further reducing their purchasing willingness and creating a vicious cycle.
Brand incidents and strategic inconsistencies present additional challenges for recovery. XTEP's brand image has faced difficulties in recent years.
The controversy surrounding the alleged "race manipulation" at the 2024 Beijing Half Marathon continues to have lingering effects. The victory by XTEP-sponsored athlete He Jie, with three African athletes wearing XTEP gear finishing as joint runners-up, sparked widespread skepticism. The event organizing committee revoked XTEP's status as a赛事合作伙伴, nullifying years of investment in event sponsorships.
Product quality complaints also trouble the brand. On the consumer platform Hei Mao, there are over 4,000 complaints related to XTEP, primarily focusing on issues like shoes coming unglued or soles detaching, and clothes deforming after washing.
Furthermore, the company's previous multi-brand strategy effectively concluded with discounted divestments. The brands K-Swiss and Palladium, acquired in 2019, were sold in 2024 for $151 million, a 42% discount to the acquisition price of $260 million. These transactions not only resulted in resource wastage but also diverted focus from the core brand's development.
In the 2025 financial report, Ding Shuibo, Founder, Board Chairman, and CEO of XTEP, stated, "Our market leadership position enables us to better cope with external market fluctuations."
However, he did not specify what these "external market fluctuations" entail. Perhaps the real volatility lies internally—stagnant growth of the core brand, an underdeveloped second growth curve, declining profit margins, and a damaged brand image. These internal issues are arguably more pressing than external fluctuations.
For Ding Shuibo and XTEP, the immediate priority may not be coping with the external market but rather addressing their own "growing pains." After all, if the core pillar of the business is unstable, even the grandest "non-generic feeling" may struggle to support the ambition of building a century-old brand.
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