Core Insights - The main brand of the company showed stable performance in Q3 2025, with a low single-digit year-on-year growth in overall channel revenue, consistent with Q2's performance, meeting expectations. Online sales outperformed offline, maintaining double-digit growth, while children's products outperformed adult products [1][2] - The Saucony brand experienced rapid growth, with over 20% year-on-year growth in overall channel revenue in Q3, and offline revenue increasing by over 30%. The company opened 16 new stores, primarily in key business districts of first and second-tier cities, maintaining an annual store opening target of 30-50 [1][2] Revenue and Inventory Management - The main brand's inventory turnover ratio was between 4-4.5 months in Q3, with discount levels maintained at 7-7.5%, indicating healthy inventory management and low discount pressure. Saucony's inventory and discount levels were also within controllable ranges, allowing flexibility for Q4 promotions [2] - The company is continuously innovating its channel strategy, increasing its presence in outlet formats. The new store formats, including the 9th generation stores and leading stores, now account for over 70% of the total store count, with a focus on high-end outlet malls [2] Strategic Initiatives - The company is optimizing its multi-brand matrix by planning to divest its fashion sports brand in 2024, focusing on core running business to enhance resource allocation. The DTC transformation is set to begin in 2025, aiming for a more efficient and high-quality channel layout [3] - The company plans to reclaim approximately 100 stores in Q4, with a total of 400 stores by the end of 2025, involving a capital expenditure of around 400 million yuan. This move is expected to enhance long-term channel competitiveness and enable the company to respond quickly to changes in terminal demand [2][3]

Investment Rating - The report maintains a "Buy" rating for the company [2][8] Core Views - The company's main brand revenue performance in Q3 is stable, with children's and online sales showing growth. The overall channel revenue for the main brand increased by a low single-digit percentage year-on-year, consistent with Q2's performance. Online sales outperformed offline, maintaining double-digit growth, while children's products outperformed adult products. Running and outdoor categories achieved double-digit growth, and functional products accounted for over 60% of the brand's offerings, stabilizing the core business [5][8] - The company is actively optimizing its channel structure and accelerating its layout in outlet stores. The new store formats have already exceeded 70% of the total store count, with a focus on high-end outlet malls. The company plans to expand its outlet store count to 70-100 by 2026, aligning with positive market trends in outlet channels [8][8] - The company is progressing steadily in its Direct-to-Consumer (DTC) transformation, planning to reclaim approximately 100 stores in Q4, with a total of 400 stores by the end of 2025. This move is expected to enhance long-term channel competitiveness [8] - The company is optimizing its multi-brand matrix by divesting from fashion sports brands and focusing on core running business, which is expected to strengthen its competitive position in the running segment [8] Financial Data and Profit Forecast - The company's revenue for FY2023 is projected at 143 billion RMB, with a year-on-year growth rate of 11%. The net profit attributable to shareholders is expected to be 10.3 billion RMB, reflecting a 12% increase year-on-year. The earnings per share (EPS) is forecasted to be 0.41 RMB [6][18] - For FY2024, revenue is expected to decline by 5% to 136 billion RMB, while net profit is projected to increase by 20% to 12.4 billion RMB. The EPS is anticipated to remain at 0.49 RMB [6][18] - The company forecasts a gradual increase in revenue and net profit from FY2025 to FY2027, with net profits expected to reach 16.0 billion RMB by FY2027, corresponding to a price-to-earnings (PE) ratio of 9 [6][18]