Core Viewpoint - The competition between On and Lululemon in the Chinese market is intensifying, with On showing significant growth and Lululemon facing challenges, particularly in profitability and market guidance [4][11]. Group 1: Company Performance - On's revenue in the Asia-Pacific region grew by 130.1% year-on-year in Q1 2025, with expectations for the Chinese market to reach approximately 4.17 billion USD by 2026 [7][8]. - Lululemon's international revenue increased by 19% year-on-year, with the Chinese market showing a growth rate of 21%, although this is a slowdown compared to previous quarters [8][10]. - Lululemon's global net revenue for Q1 was 2.4 billion USD, while On's net sales reached approximately 894 million USD [11][12]. Group 2: Market Strategy - On is expanding its direct store strategy in China, aiming to increase its store count to 100 by 2026, with a focus on flagship stores and online channels [8][10]. - Lululemon plans to increase its store count in China to 220 by 2026, with a strategy to optimize store layouts and enhance digital marketing efforts [10][11]. - Both companies are targeting second and third-tier cities for expansion, with Lululemon already having a significant presence in these markets [10][19]. Group 3: Product Offering and Consumer Base - On is focusing on diversifying its product range, particularly in apparel, which saw a 93.1% year-on-year growth in Q1 2025, while footwear grew by 40.5% [17]. - Lululemon's men's apparel segment is growing but remains a smaller part of its overall business, with a focus on high-end consumers [19][20]. - Both brands are competing for the same consumer base of young, affluent individuals who are interested in fitness and lifestyle products [14][20]. Group 4: Competitive Landscape - The competition between On and Lululemon is characterized by overlapping consumer demographics, with both brands leveraging community engagement and digital platforms for marketing [14][20]. - The market is becoming increasingly fragmented, with other international brands also vying for market share in China, indicating a competitive environment for both On and Lululemon [21][22]. - The potential for future clashes in product categories, particularly in footwear and apparel, is anticipated as both brands continue to expand their offerings [20][22].

Core Insights - The competition between On and Lululemon in the Chinese market is intensifying, with On showing significant growth and Lululemon facing challenges [2][4][20] - On's recent quarterly report indicates a strong performance in the Asia-Pacific region, with a 130.1% year-on-year revenue increase, while Lululemon's first-quarter net profit has declined for the first time in four years [4][9] - Both companies are expanding their store presence in China, with On planning to reach 100 stores by 2026 and Lululemon aiming for 220 stores [6][8] Company Performance - On's revenue in the Asia-Pacific region accounted for 16.6% of its total, with expectations of reaching approximately 4.17 billion USD in the Chinese market by 2026 [4][5] - Lululemon's international revenue grew by 19%, with a 21% increase in mainland China, although growth has slowed compared to previous quarters [4][6] - On's net sales are projected to grow by at least 28% for the year, while Lululemon has lowered its annual performance guidance [10][9] Market Strategy - On is focusing on direct store expansion, with a strategy to increase the proportion of direct stores and enhance online channels [5][6] - Lululemon is balancing its expansion in lower-tier cities while maintaining its high-end brand positioning, with plans to open 30 new stores in third-tier cities [8][17] - Both companies are leveraging community engagement through fitness activities and online platforms to attract consumers [11][20] Product Development - On is recognized for its innovative running shoe technology, while Lululemon is still developing its footwear line, primarily targeting female consumers [12][13] - On's apparel segment is growing rapidly, with a 93.1% increase in sales, indicating a shift in focus towards diversifying its product offerings [15][20] - Lululemon's men's apparel segment is expanding, but it still relies heavily on female consumers for sales [17][20] Competitive Landscape - The competition is not limited to On and Lululemon, as other brands like Nike and Adidas are also vying for market share in China [20][21] - The Chinese sportswear market is expected to grow at an annual rate of 11.62% from 2021 to 2025, but growth may slow after 2024 [21][22] - Both companies face the challenge of maintaining brand identity while expanding their product categories [22][23]