Key Points Industry and Company * Company: 361° * Industry: Sports apparel and footwear Core Views and Arguments * Expansion Plans: 361° is focusing on expanding in Southeast Asia, particularly in countries like the Philippines, Vietnam, and Thailand. They have opened a large, 300-square-meter flagship store in Malaysia to test the market and assess its impact. The company will continue to expand through a combination of direct sales and dealer partnerships [1]. * Online Channel Growth: The company's online channel is experiencing strong growth. The discount rate for the fourth quarter was maintained between 4.5 and 5.5, similar to previous trends. New product sales accounted for approximately 76% to 78% of total sales [2]. * Brand Category Matrix: 361° will continue to focus on running as the core category, leveraging the increasing number of runners and their diverse needs. They will enhance product competitiveness through core technology advantages and increase brand exposure through sponsorships of large events like the Asian Winter Games [3]. * Domestic Channel Expansion: The company plans to continue opening large stores and upgrading store images. They have introduced the 10th generation store image, which has significantly improved brand image and sales performance. They also plan to open more super stores to meet consumers' one-stop shopping needs [4]. * Future Growth Expectations: The company is optimistic about future growth despite intense competition. They have launched new product lines that have performed well in the market. Basketball will continue to be a key area for young consumer engagement. They plan to sponsor NBA stars to visit China in 2025 to enhance brand influence and sales [5]. * E-commerce Performance: The company's e-commerce channel performed well in the fourth quarter, particularly during the Double 11 shopping festival. They launched many hot-selling products and achieved good results. They plan to continue promoting new products during the Spring Festival [6]. * E-commerce Profitability: The e-commerce channel has a higher gross margin than the average level due to the direct sales model. However, the net profit margin is relatively low due to the need to amortize a large amount of fixed costs. The company expects the profit margin to gradually improve as the e-commerce business volume increases [7]. * Children's Wear Business: The children's wear business performed well in 2024, ranking second in the children's sports brand market. The company plans to continue investing in brand endorsement and product innovation in 2025. They also plan to strengthen store layout in first-tier and second-tier cities and large shopping centers [8]. * Competition in Low- and Medium-Tier Cities: The company's competitiveness in low- and medium-tier cities is reflected in several aspects. They have a large number of stores in first-tier and second-tier cities, accounting for about 25% of the total. The remaining 70% of stores are distributed in third-tier and lower cities. They encourage the opening of large stores, especially in shopping centers and trade centers, to better adapt to consumers' changing consumption habits [9]. * Outdoor Products: Outdoor products currently account for about 3% of the company's overall revenue and are growing well. They sponsored the 9th Asian Winter Games, which brought more exposure opportunities for outdoor products. They plan to continue to strengthen new product launches, such as waterproof and moisture-proof functional products, to meet consumer needs and promote the growth of the outdoor product line [10]. * Running Shoes: The company's running shoes, especially the knitted shoe series, performed well in 2024. The sales volume of top-end running shoes like Lifeng and Feiran reached about 500,000 pairs in the first half of the year. The sales volume of Feiran 33.5, a carbon plate racing shoe, reached 300,000 pairs in the fourth quarter, far exceeding expectations [12]. * Price Strategy: From the perspective of footwear, 70% of the products are priced between 350 and 500 yuan. The products priced above 500 yuan and below 350 yuan account for 15% each. According to the order data of the first three quarters of 2025, the average selling price (ASP) of the company has basically remained stable, and some categories may remain flat or have a slight unit increase. The company has done a lot of work in price control, setting the price within the comfort range of consumers, and will continue to maintain the quality-price advantage in 2025 [13]. * Urban and Rural Market Strategy: The company's urban and rural market strategy is mainly carried out by first-tier distributors and their authorized retailers. They have a 25% market share in first-tier and second-tier cities. Due to the company's price positioning and product positioning, which rely more on the mass market, there is still a lot of room for growth in third-tier and lower cities. These areas have a significant increase in demand for basic sports equipment such as running and basketball. The company hopes to seize the demand of consumers who have not yet formed fitness habits for equipment [14]. * Cash Utilization: The company has a substantial cash balance and is considering dividend payments or share buybacks to maximize shareholder returns. They plan to announce specific plans in the future [15]. * Store Innovation: The company has introduced many innovative store types in the past year. The efficiency of different store types is as follows: the 10th generation store has significantly improved brand image and sales performance. The 8th generation store has been upgraded to the 10th generation. Children's wear stores have also been upgraded to the 5th generation. The new stores are also the 5th generation. From the perspective of business format, they are mainly concentrated in landmark locations and shopping centers, rather than incremental business formats such as outlet stores. The terminal sales discount is between 7 and 7.3, and the sales turnover growth is good, but the price growth is low, and the profit margin is 8% to 12% on average, compared with the original 15% to 25% of the commission [16]. * Industry Competition Outlook: The company expects the market competition in 2025 to remain intense, with significant competition pressure in both offline channels and product categories and prices. However, they are optimistic about the future. The order meetings for the first three quarters of 2025 have ended, and the results are good. They will continue to increase investment in e-commerce business, and currently 80% of online sales come from new products. They will also strengthen the development of independent operation teams to maintain growth momentum. In the children's wear category, they will also continue to improve, and the 5th generation children's wear store image and new layout in shopping centers will further promote the development of this field [18]. * Cash Utilization Plan: The company plans to maintain a dividend payment guidance of not less than 40% and hopes to steadily increase the dividend yield. Currently, the dividend yield is about 8%, which is at a high level in the industry. For cash utilization, the company is very cautious and conservative and will carefully study various options, including increasing the dividend payment ratio, DTC model, and acquisitions. They may consider these options at the right time, but the focus is still on doing a good job with existing products and brand operations [19]. * Overall Valuation and Growth Logic: The company's current valuation is relatively low, but the dividend yield is about 8%, which is very attractive. From an investment perspective, the company's future growth logic is clear and supported by data, including new market online sales, new product ratio, independent operation team development of e-commerce business, and continuous improvement of sports children's wear. These factors have provided a solid foundation for the company's future development [20]. Other Important Content * Overall Operating Data: The overall operating data for the fourth quarter of 2024 was good. The main brand's growth rate was about 10%, and the children's wear growth rate was 10% to 12%. The online growth rate was 30% to 35%, which met the company's expectations [24]. * Order Meeting: The order meetings for the spring, summer, and autumn quarters of 2025 have ended, and the results were good, mainly reflected in the increase in order volume and a slight increase in price. The company is optimistic about the market outlook for 2025 [32]. * Social Responsibility: The company quickly responded to the 6.8 magnitude earthquake in Shigatse, Tibet on January 7, 2024, and donated 8 million yuan of warm materials to help the affected people. This reflects the company's concern for the affected people and its sense of social responsibility [31].
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