Core Viewpoint - Xtep's FY25E guidance remains intact despite a slight miss in 2Q25, with expectations for sales growth to sustain into 2H25E due to low inventory levels and undemanding valuation, maintaining a BUY rating with a target price of HK$ 7.20 based on 14x FY25E P/E [1][4] Sales Performance - Retail sales growth for Xtep slowed in 2Q25 but remained on track for 1H25, with management maintaining FY25E guidance of positive group-level sales growth and 10%+ net profit growth [2][4] - Xtep's core brand is expected to achieve FY25E guidance, driven by robust growth in the running segment, which saw a 30%+ YoY increase in 1H25E [3][4] Inventory and Discounts - Xtep's inventory to sales ratio was about 4 to 4.5 months in 2Q25, indicating a healthy inventory level, while retail discounts remained stable at 25% to 30% off [5][4] - Management expects inventory and discount conditions to remain stable for FY25E, with the inventory to sales ratio projected to stay around 4 to 4.5 months [5][4] E-commerce and Offline Growth - E-commerce sales growth was around 10% in 2Q25, with offline sales growth lagging, but retail sales growth improved in July 2025, driven by increased summer demand and promotional activities [6][4] - Saucony brand is experiencing a re-acceleration in growth supported by offline SSSG and new store openings, despite a temporary slowdown in e-commerce [6][4] Direct-to-Consumer (DTC) Strategy - The DTC transformation is ongoing, with plans to repurchase 100 to 200 stores in 4Q25E and 300 to 400 stores in FY26E, funded by internal cash flow [7][8] - The company is also set to upgrade its management system for products and members to enhance efficiency under the DTC model [8]