Group 1: Market Dynamics - Forever 21 has made its fourth return to the Chinese market, highlighting China's significance in global apparel consumption, driven by a large young consumer base [1][3] - Authentic Brands Group, which owns Forever 21, has established its Asia-Pacific headquarters in Shanghai, emphasizing the city as a strategic market for global expansion [3][4] - The Shanghai metro line 18 has been rebranded with Forever 21's colors to engage young consumers, indicating a targeted marketing strategy [3] Group 2: Global Brand Strategies - HOKA has opened its first global brand experience center in Shanghai, reflecting the city's importance in the brand's Asia-Pacific strategy [4][5] - Authentic's retail revenue in the Asia-Pacific region is approximately $10 billion, with ambitions to increase its share from 2% to 5% in the next three years [12][13] - Adidas has seen a resurgence in the Greater China region, achieving €1.83 billion in revenue in the first half of 2025, indicating a recovery in the market [13][14] Group 3: Manufacturing and Globalization - Shenzhou International has expanded its manufacturing footprint in Vietnam and Cambodia, with significant investments aimed at integrating its supply chain [8][9] - The global footwear manufacturing landscape is shifting, with companies like HOKA and Adidas increasing production in Vietnam and Indonesia, reducing reliance on China [9][10] - China's textile and apparel exports remain dominant, with a total of $582 billion in exports in the first five months of 2025, surpassing other major exporting countries combined [10] Group 4: Consumer Insights - Research indicates that China's consumption power is often underestimated, with a report suggesting that actual consumption levels are closer to those of developed countries than previously thought [14][15] - The average Chinese consumer purchases approximately 22 pieces of clothing annually, comparable to Mexico, while the footwear purchase rate is stable at about 2 pairs per year [15] - The report highlights that the perceived gap in consumption levels is largely due to price advantages and currency discrepancies, suggesting potential for growth in both quantity and quality of consumption in China [15]

Core Insights - HOKA has become a frequent presence in the shoe cabinets of Chinese middle-class consumers, experiencing rapid growth since being acquired by Deckers Brands in 2013 [1] - The company reported its best-ever quarterly performance for HOKA, but the growth rate is showing signs of decline [1][4] Financial Performance - Deckers Brands achieved revenue of $965 million in Q1 2026, a year-over-year increase of 16.9%, with a gross margin of 55.8% [2] - HOKA's net sales grew by 19.8% to $653.1 million, compared to $545.2 million in the same period last year [2] - UGG also performed well, with net sales increasing by 18.9% to $265.1 million [2] Regional Growth - The EMEA region was a key growth driver, with record replenishment volumes in wholesale and steady growth in DTC channels [3] - The APAC region showed impressive growth, with HOKA expanding its market presence through partnerships and self-operated retail stores in China [3] Growth Rate Decline - HOKA's growth rate has slowed, dropping from 29.7% in Q1 2025 to 19.8% in Q1 2026, indicating a nearly 10 percentage point decline [4] - Overall net sales growth for Deckers Brands also decreased from 22.1% to 16.9% in the same timeframe [4] Competitive Landscape - HOKA faces intensified competition in the high-performance running shoe market, particularly from Brooks in the U.S. and local competitor Kailas in China [5] - Brooks reported a 15% increase in global revenue, while HOKA's growth in the U.S. is slowing [5] - Kailas dominates the domestic market with a 34.8% share in trail running shoes, while HOKA holds 24.6% [5] Future Outlook - For Q2 2026, Deckers Brands expects net sales between $1.38 billion and $1.42 billion, with diluted earnings per share projected between $1.50 and $1.55 [6] - The outlook is contingent on the stability of business conditions and potential macroeconomic uncertainties [6]

Core Viewpoint - The competition between HOKA and On is intensifying, with HOKA experiencing a significant slowdown in growth while On continues to thrive, raising questions about the reasons behind these divergent paths in a similar market environment [3][5][32]. Group 1: HOKA's Performance - HOKA's sales growth has slowed to 10% in the latest quarter, down from 24% and 35% in the previous two quarters, with sales reaching $586 million [3][5]. - The brand's product innovation has been insufficient, leading to a decline in consumer interest, as evidenced by a drop in natural search volume for new products [25][32]. - HOKA's positioning has become somewhat mediocre, lacking breakthroughs in professional fields and being overly conservative in its fashion transformation [32][54]. Group 2: On's Performance - On has reported a remarkable 43% growth, with net sales reaching 727 million Swiss francs, and has raised its annual forecast for at least 28% growth in the upcoming fiscal year [5][33]. - The brand has successfully established itself in the high-end running market, with an average shoe price exceeding 1,000 yuan, and has received endorsements from elite athletes [42][52]. - On's marketing strategy includes collaborations with high-fashion brands and a focus on community engagement, which has strengthened its brand positioning and consumer loyalty [44][50]. Group 3: Market Dynamics - The outdoor sports market in China has significant growth potential, with a current penetration rate of only 28%, compared to over 50% in overseas markets [54]. - Both brands face competition not only from each other but also from established giants like Nike and Adidas, as well as emerging niche brands [56]. - The ongoing competition between HOKA and On highlights the necessity for brands to continuously innovate and capture consumer attention in a rapidly changing market [54][58].