Sector moderation persists – 361 Degrees was the first sportswear name to publish its 3Q26 operating update, hosting an investor call to walk through the figures. Growth softened on both a quarterly and annual basis across offline and online channels, weighed by subdued consumer demand and a high comparable base.

Specifically, in-store sales of the core brand and kids brand posted mid-single-digit (MSD) YoY retail sales growth, with the discount rate holding at around 70%, ahead of industry peers, while e-commerce retail sales grew at a mid-to-high single-digit YoY pace. That said, growth across all segments decelerated versus the same quarter in each of the prior three years and slipped sequentially (QoQ). Overall, the company has delivered double-digit annual growth since 2021, and the slowdown is sector-wide rather than company-specific.

Super Premium Stores hit full-year target ahead of schedule – The company added 21 Super Premium Stores in 3Q, bringing the total in Mainland China to 208, with a further 2 overseas, which is already above management's original year-end target of 200. Looking ahead, management intends to open more of these stores in tier-1 and tier-2 cities. The format carries a relatively high attach rate, appeals to consumers aged 30–45, and drives higher household spend.

Softness likely to extend into 4Q – Over the recent National Day Golden Week, the company's performance was in line with expectations but continued to reflect broad-based softness across segments, according to management. We also don’t expect the upcoming Double 11 Festival to be a meaningful catalyst, as e-commerce promotions normalize across the sector, the sales spikes around major holidays and shopping festivals are flattening. The online deceleration has in fact been visible since 2Q26.

Our view:

A 4Q recovery remains likely, as 4Q historically grows faster than 3Q backed by e-commerce promotion, particularly given the company's dual-track inventory model with online-exclusive product lines that protect full-price sell-through, it leaves 361 well positioned to capture steady demand from the year-end e-commerce shopping festivals. We maintain our FY26E top-line growth forecast of 8–10%, consistent with prior official guidance. The stock trades at 6.2x FY26E P/E. (Amelia Deng)