Is a 30% surge in Saucony hard to hold? Xtep’s performance hits a new high, but the stock price hasn’t caught up

AI Q&A · It’s hard to drive the overall impact when Saucony’s growth is up 30%; where are the bottlenecks in the diversification strategy?

On March 26, Xtep International released its full-year 2025 financial results, becoming the last of the four major domestic sporting goods companies to turn in its annual performance report. The financial report shows that the group’s revenue from continuing operations increased 4.2% year over year to RMB 14.15B; attributable net profit was RMB 1.37B, up 10.8%.

But there has been a gap between market reaction and its actual performance. A reporter from Nandu · Bay Finance and Society noted that after the financial report was released, during the intraday trading on the afternoon of March 26, Xtep International’s share price fell by more than 8% at one point. It closed the day at HK$4.78 per share, down 7%; on the next trading day, the share price continued to decline, with an intraday drop of more than 5%. As of the afternoon close, the company’s market value was about HK$12.77B.

Performance hits new highs steadily

The financial report shows that in 2025, Xtep International’s revenue was RMB 14.15B and attributable net profit was RMB 1.37B. Although both key indicators reached historical highs. The company said that the growth in performance was mainly driven by the steady performance of the Xtep main brand and strong growth in the professional sports segment.

From the business structure perspective, different brand segments within Xtep International show clear differentiation. The data show that in 2025, revenue of Xtep’s main brand, representing the mass-market sports segment, was RMB 12.52B, accounting for 88.4% of the group’s total revenue; while revenue of the professional sports segment represented by Saucony and M ay le (M ile) was RMB 1.64B, accounting for 11.6%. Meanwhile, Xtep’s overseas business revenue grew rapidly, with cross-border e-commerce revenue increasing by more than 220% year over year.

But this impressive performance did not push the share price up. On the day the financial report was released, Xtep International’s share price fell by more than 8% at one point, and closed at HK$4.78 per share, down 7%; on the next trading day, the share price continued to slide, reaching a new intraperiod low.

Market analysts believe that after delivering historical high performance, Xtep International still faced fund sell-offs, mainly related to the slowdown in growth of the core main business and the overall performance falling short of market expectations. Although both revenue and net profit reached historical highs, they were still below the levels previously predicted by multiple institutions: the Nandu · Bay Finance and Society reporter noted that earlier, China Merchants Securities (Changjiang Securities) estimated attributable net profit for 2025–2027 to be RMB 1.41 billion, RMB 1.57 billion, and RMB 1.71 billion, respectively. Huaxing Securities expected 2025 revenue of RMB 14.31 billion and attributable net profit of RMB 1.39 billion.

Main brand revenue growth slows to 1.5%

As the baseline contributing nearly 90% of the group’s revenue, the growth momentum of the Xtep main brand is clearly weakening. Although the revenue scale reached a new high, the growth rate has been declining for several consecutive years. Past data show that from 2022 to 2024, the year-over-year revenue growth rates of the Xtep main brand were 25.9%, 7.4%, and 3.2%, respectively, showing a downward trend year by year. In 2025, revenue in this segment grew by only 1.5%, which not only fell below the group’s overall growth rate of 4.2%, but also marked the lowest growth rate in recent years.

While revenue growth slowed, the operating efficiency of the main brand also deteriorated. The financial report shows that in 2025, gross profit of the mass-market sports segment of Xtep increased slightly by 0.1% to RMB 5.16B; gross margin fell from 41.8% in 2024 to 41.2%. Operating profit margin also declined from 15.9% to 15.3%.

For the narrowing of the main brand’s gross margin, Xtep International explained in the financial report that it was mainly because the retail industry faced unfavorable factors; the company increased promotional subsidies and discount rates granted to authorized distributors to support sales. As for the reduction in operating profit margin, it was due to the decline in gross margin plus increased operating expenses such as logistics costs and platform fees.

Saucony’s strong rise

In contrast to the weakness in the mass-market sports segment, the professional sports segment, made up of Saucony and M ile, still maintained double-digit growth.

The financial report shows that in 2025, the full-year revenue of Xtep’s professional sports segment reached RMB 1.64B, up 30.8% year over year; operating profit increased 46.4% to RMB 114 million. Xtep International said that this significant growth was attributable to double-digit same-store growth, combined with growth in apparel sales, as well as the continued momentum of online channels, highlighting strong performance in retail business.

But it should be noted that the driving effect of this segment on the group overall remains limited. The operating profit of RMB 114 million is still less than one-tenth of the mass-market sports segment’s figure. At the same time, the growth rate of this segment is also gradually slowing. From 2022 to 2025, the year-over-year revenue growth rates of the professional sports segment were 99%, 98.9%, 57.2%, and 30.8%, respectively.

In addition, the decline in gross margin of the professional sports segment has also drawn market attention. The financial report points out that the segment’s gross profit rose 27.0% to RMB 908 million in 2025, but gross margin was 55.5%, down 1.7 percentage points from 57.2% in 2024. In response, Xtep International explained that the decline in gross margin was due to an increased contribution from apparel sales, while apparel’s gross margin is typically lower than footwear’s. Going forward, how the Saucony-branded companies manage to defend a moat of high-end, high-gross-profit while expanding brand boundaries and enriching product categories is something the market is worth watching.

Written and compiled by: Sun Yang, a reporter from Nandu · Bay Finance and Society