China sportswear 2Q weakness in line with expectations; Anta outperformed and remains the top pick

Overview

This report summarizes the key points from a China sportswear expert call hosted by JPMorgan on July 2. The expert was a distributor in eastern China covering brands including Anta, Li Ning, Nike, Under Armour and MLB. The report believes that weak industry sales in 2Q26 were in line with expectations, reflecting declining customer traffic, unfavorable weather and the timing shift of the Dragon Boat Festival; however, Anta stood out among the brands covered by the expert and was the only brand to achieve positive retail growth.

Core views

The core view is that near-term industry demand is weak, but structural divergence is evident. Anta is considered better positioned to capture industry opportunities due to its well-executed multi-brand portfolio and greater overseas expansion potential relative to peers. Outdoor brands continue to benefit from strong consumer mindshare, channel expansion and stable store productivity, while womenswear also maintained steady growth. In contrast, footwear and summer apparel were the main drags in 2Q, running growth slowed, and the basketball category remained weak.

Analysis framework

The report primarily uses frontline channel expert interviews. It assesses the 2Q26 operating environment and relative brand performance in China's sportswear industry through observations from an eastern China distributor regarding brand sales, sell-through rates, discounts, inventory, conversion rates, average transaction values and category trends.

Methodology notes

• Channel researchExpert call / distributor interview

  Validate retail trends, inventory, discounts and category performance through feedback from frontline distributors.

  This approach is suitable for capturing in-quarter sales momentum and brand divergence, but the sample is concentrated in eastern China, so the conclusions should be cross-validated against company disclosures and broader channel data.

• Relative performance analysisCross-brand comparison

  Compare the growth, discounting and inventory performance of Anta, MLB, Li Ning, Nike and UA in 2Q26.

  The report ranks the brands based on Anta's positive growth, MLB's broadly flat performance, Li Ning's mid-single-digit decline, Nike's approximately 6% decline and UA's approximately 10% decline.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Anta Sports (2020.HK)

  Focus company and top pick

  Strengths

  The only brand among those covered by the expert to achieve positive growth in 2Q; well-executed multi-brand portfolio; greater overseas expansion potential than peers; outdoor brands such as Kolon benefiting from channel expansion and stable store productivity.

  Weaknesses

  Still exposed to declining industry customer traffic, weak summer collection sell-through and pressure from deeper discounting.

  Comparison

  Outperformed MLB, Li Ning, Nike and UA; inventory of approximately 4.5 months was lower than that of MLB and UA.

  Risks

  Continued weakness in industry demand, slower-than-expected inventory clearance, further discounting and weaker-than-expected execution of overseas expansion.

• Li Ning (2331.HK)

  Peer comparison company

  Strengths

  Conversion rate above 10%; the partnership with Curry could provide long-term support for the basketball category.

  Weaknesses

  2Q retail sales declined by a mid-single-digit percentage, partly due to a high base; the basketball category remained weak.

  Comparison

  Underperformed Anta and was slightly weaker than MLB, but performed better than Nike and UA.

  Risks

  Basketball partnership monetization slower than expected, insufficient category recovery, and inventory and discounting pressure.

• Nike

  Expert-covered brand and peer comparison

  Strengths

  Conversion rate above 10% and still supported by a strong brand foundation.

  Weaknesses

  2Q sales declined by approximately 6%, with inventory at approximately 4.7 months.

  Comparison

  Underperformed Anta, MLB and Li Ning, but performed better than UA.

  Risks

  Weak customer traffic in China, inventory pressure and intensifying competition.

• UA

  Expert-covered brand and peer comparison

  Strengths

  No clear strengths were provided in the input.

  Weaknesses

  2Q sales declined by approximately 10%, with inventory at approximately 7 months, making it one of the more pressured brands covered.

  Comparison

  Underperformed Anta, MLB, Li Ning and Nike.

  Risks

  Elevated inventory, discounting pressure and insufficient demand recovery.

• MLB

  Expert-covered brand and peer comparison

  Strengths

  2Q sales were broadly flat, outperforming most declining brands.

  Weaknesses

  Inventory was approximately 5.5 months, higher than that of Anta, Li Ning and Nike.

  Comparison

  Underperformed Anta, but performed better than Li Ning, Nike and UA.

  Risks

  Inventory clearance pressure and fluctuations in consumer demand.

Key data

• Internal target achievement rate80%-85%Sales in the expert's region weakened after March, resulting in a target achievement rate below the ideal level.
• 2Q26 brand performance rankingAnta positive growth; MLB broadly flat; Li Ning mid-single-digit decline; Nike approximately 6% decline; UA approximately 10% declineAnta was the only brand among those covered by the expert to record positive growth.
• Spring collection sell-through rate75%-80%Broadly in line with expectations.
• Summer collection sell-through rateApproximately 60%Below expectations, with footwear and summer apparel the main drags.
• 2Q discount levelApproximately 16% discount, deepening by 1-2 percentage points year over yearDiscounts were below 15% in the same period last year, indicating rising inventory and demand pressure.
• Inventory levelsApproximately 4.5 months for Anta/Li Ning, 4.7 months for Nike, 5.5 months for MLB and approximately 7 months for UAInventory pressure was more pronounced at certain brands.
• Full-year retail sales forecastDowngraded from low-double-digit growth to flat to low-single-digit growthThe expert lowered the full-year forecast due to weak 2Q performance.
• 1H26 overall conversion rateApproximately 9%, versus approximately 8% last yearConversion improved despite declining customer traffic; Li Ning and Nike were above 10%.
• Units per transaction2.3 overall versus 2.5 last year; Anta 2.5, UA 2.1, Nike and MLB 1.7-1.8Units per transaction declined slightly, but overall average transaction value improved.

Impact & implications

The investment implication is that near-term industry volume momentum is under pressure, and brands relying solely on a recovery in customer traffic may face sales and inventory pressure. However, leading companies with multi-brand portfolios, outdoor exposure, a professional-performance positioning and overseas expansion capabilities are more likely to generate relative returns. Anta's positive growth and relatively manageable inventory support the investment view that it is the top pick in China's sportswear sector.

Risks

• Unfavorable weather, declining customer traffic and holiday timing shifts may continue to weigh on near-term retail sales.
• Summer collection sell-through below expectations could lead to further inventory pressure and deeper discounting.
• The full-year sales forecast has been downgraded from low-double-digit growth to flat to low-single-digit growth, indicating reduced visibility on industry growth.
• The report is based primarily on feedback from experts in a single region, limiting the representativeness of the sample.
• Growth in outdoor and womenswear may not fully offset weakness in footwear, summer apparel, running and basketball.

What to watch

• The impact of summer vacation traffic and hot weather in July-August on summer apparel and footwear sales.
• Changes in inventory months and discounting at Anta, Li Ning, Nike, MLB and UA.
• Channel expansion and store productivity for Anta's multi-brand portfolio and outdoor brand Kolon.
• The sustainability of growth at outdoor brands under Amer Sports, including Salomon, Arc'teryx and Kailas.
• The pace at which the Li Ning-Curry partnership translates into actual growth in the basketball category.
• Whether full-year retail sales expectations are downgraded further or begin to recover.