ANTA Achieved Counter-Trend Growth in 1H26; Morgan Stanley Believes July's Weather Impact Should Not Represent the 2H Trend

Overview

The report reviews ANTA Sports' 1H26 results and focuses on determining whether the sales slowdown from July through 3Q26 reflects deteriorating demand trends or short-term weather noise. Morgan Stanley acknowledges that 3Q26 will be dragged down by July but does not advocate extrapolating July-August performance across the entirety of 2H26, given that the company's profitability, store efficiency, multi-brand structure, and outdoor-category growth remain robust.

Core views

ANTA achieved 13% year-over-year growth in both revenue and adjusted net profit in 1H26 despite a weak consumer environment, representing one of the stronger growth rates among the large-cap consumer companies covered by Morgan Stanley. The group's operating margin reached a record high of 26.7%, while operating margins at FILA, Descente, and Kolon all increased. Store efficiency at ANTA, FILA, Descente, Kolon, and MAIA also improved across the board, despite generally declining offline retail traffic in China. The report therefore believes that ANTA's multi-brand, multi-segment portfolio and strong channel quality continue to validate the sustainability of its growth. ModelWare forecasts show revenue increasing from RMB70.826 billion in 2024 and an estimated RMB78.680 billion in 2025 to an estimated RMB85.576 billion in 2026 and RMB93.086 billion in 2027; corresponding EPS figures are RMB4.27, RMB4.70, RMB5.13, and RMB5.62. Estimated P/E, EV/EBITDA, P/B, and dividend yield for 2026 are 13.2x, 7.9x, 2.6x, and 4.0%, respectively, versus 12.0x, 7.0x, 2.3x, and 4.4% for 2027. Regarding recent operations, the company stated that abnormal weather in July had a substantial impact on both premium and mass-market brands, exceeding the impact of macroeconomic factors. August was better than July, with premium brands quickly regaining growth momentum, while mass-market brands saw only a limited recovery. Morgan Stanley therefore expects a broad-based growth slowdown among most Chinese sportswear companies in 3Q26, mainly due to the drag from July; however, the report does not treat persistently adverse weather as the industry's base-case scenario. Management expects autumn product launches, seasonal changes, and the calendar shift of the Mid-Autumn Festival to support a continued recovery in September. The report believes the July-August trend should not be extrapolated directly across the entirety of 2H26, although mass-market consumer demand may remain weak. The company maintained its full-year 2026 sales guidance: low-single-digit growth for the ANTA brand, mid-single-digit growth for FILA, and growth above 20%-25% for niche brands. Morgan Stanley believes the company remains on track for overall sales growth of high single digits to 10% in 2026. Amer Sports' continued earnings outperformance and guidance upgrade also provide profit support: based on the upper end of its guidance, it is expected to contribute approximately RMB2 billion in equity income to ANTA in 2026, an increase of approximately RMB800 million year over year. The core ANTA brand continues to close underperforming stores. Store counts for ANTA Core and ANTA Kids declined 1% and 6% year over year, respectively, while retail sales were flat and grew by low single digits, respectively, implying store-efficiency improvements of 2% and 3%. A lower wholesale-channel mix drove gross-margin improvement, but higher Winter Olympics-related expenses and R&D spending weighed on the operating margin. The store network continues to shift from street stores to shopping malls: ANTA Palace is growing faster than the overall brand; Sneakerverse plans to keep its store count stable because of its higher product-refresh requirements; and ANTA Superstore is positioned as a one-stop shopping destination with a broader product assortment, although regional performance varies. More than 500 Lighthouse franchised street stores, mainly in lower-tier cities, are being upgraded; their average monthly sales per store are approximately RMB440,000, 10% above the 2H25 average. Average monthly sales per store at FILA Classic, FILA Kids, and FILA Fusion increased to RMB1.02 million, RMB390,000, and RMB460,000, respectively, while discounting improved. Apparel returned to high-single-digit growth, including 50% growth in tracksuits; tennis and golf products both grew by low double digits, while platform sneakers grew by high single digits. A higher online sales mix reduced the gross margin, but closures of underperforming stores, disciplined marketing expenses, and an improved online operating margin drove an increase in the overall operating margin. FILA's long-term operating-margin target remains approximately 25%, despite reaching approximately 28% in 1H26. Descente's retail sales grew by more than 25% in 1H26, with discounts below 10%. Core footwear and apparel grew 40% and 50%, respectively, while average monthly sales per store reached RMB3 million; the number of stores with annual sales exceeding RMB50 million increased from 49 in the prior year to 53. Annual active membership exceeded 2 million, and the number of high-tier members grew 30%. These indicators show that its growth is driven not only by store openings but also by products, membership, and store efficiency. Kolon's retail sales grew by more than 45% in 1H26, with core hardshell apparel and footwear growing 70% and 80%, respectively, as the growth driver shifted from outdoor-lifestyle products to professional outdoor products. Discounts were below 10%, while average monthly sales per store increased from RMB2.25 million in 2025 to RMB2.8 million in 1H26. The brand opened 11 new stores in South China, where average monthly sales per store increased from RMB1.7 million to RMB2.5 million, demonstrating its ability to expand regional coverage and improve efficiency despite a weak macroeconomic environment. MAIA ACTIVE remained loss-making in 1H26 and plans to launch new store formats and products in 2H26; its store count is planned to increase from approximately 50 currently to approximately 70 by year-end. The report views the store expansion as a signal that management believes store economics are sufficient to enter the next phase, although profitability has yet to be achieved. In 1H26, Jack Wolfskin primarily focused on destocking, closing underperforming stores, and converting some distribution channels to DTC, with overall progress in line with expectations and its China business performing better than expected. The first new store in 2H26 is scheduled to open in Changchun in September, while a new Munich store is also planned for the second half. The brand will be positioned as a professional all-terrain hiking brand for mass-market consumers, with apparel remaining its core category. The China market will primarily use online and DTC models; because of Europe's different retail structure, distribution channels expected to account for 40%-50% of sales will be retained. The brand recorded a loss of approximately RMB200 million in 1H26 and aims to become profitable in 2027. The report believes it is laying the foundation to capture mass-market outdoor demand in 2027-2028. Overseas expansion is initially focused on Southeast Asia, primarily through ANTA and FILA. The Middle East business has also commenced, but progress has been slower than planned because of ongoing geopolitical conflicts. In Europe and the United States, the company is pursuing online penetration and partnerships with major offline retailers, while Amer Sports can help establish retailer relationships and provide insights into local consumers. The company expects overseas revenue to reach RMB2 billion this year and targets RMB10 billion in approximately five years. In 1H26, the group operated approximately 500 single-brand stores overseas, including approximately 250 ANTA stores, 16 FILA stores, and four Descente stores, with the remainder mainly comprising Jack Wolfskin stores and stores operated for Amer in Southeast Asia. Management expects the outdoor industry to continue outperforming the overall sportswear industry over the next three years, with the current focus on increasing penetration in lower-tier cities. Outdoor-sports participation in China is approximately 30% of the total population, significantly below the approximately 60% level in Europe and the United States. The report identifies two industry growth drivers: the continued expansion of the consumer base and a demand shift from basic products toward products with greater functionality and professional performance. Descente, Kolon, and, in the future, Jack Wolfskin serve different consumer groups and price segments, enabling ANTA to benefit from rising penetration and product-upgrade trends.

Analysis framework

Morgan Stanley first assesses overall 1H26 performance using revenue, adjusted net profit, and operating margin, and then decomposes the short-term July-August slowdown into weather, macro demand, and brand-tier differences. The report subsequently examines each brand's store count, store efficiency, discounts, category growth, and margin changes to validate growth quality. Finally, it evaluates the 2026 targets and medium-term growth path by incorporating Amer Sports' equity income, the integration of Jack Wolfskin, the overseas store footprint, and the outdoor-participation gap between China and foreign markets.

Methodology notes

• Company Fundamentals and Financial Framework

  Morgan Stanley ModelWare Framework

  The report states that, unless otherwise specified, financial metrics and forecasts are based on the Morgan Stanley ModelWare framework, which provides a consistent forecasting basis for revenue, profit, EPS, and valuation metrics.

• Industry/Sector Analysis FrameworkPrice-Volume Decomposition

  Decomposition of Store Count, Retail Sales, and Store Efficiency

  The report combines changes in store count with retail-sales growth to determine whether growth comes from store expansion or improved store efficiency. For example, ANTA Core and ANTA Kids maintained or increased sales despite lower store counts, implying store-efficiency improvements of 2% and 3%, respectively.

• Company Fundamentals and Financial FrameworkEarnings Quality Analysis

  Analysis of Gross-Margin and Operating-Margin Drivers

  The report separately identifies the effects of channel mix, online penetration, closures of underperforming stores, marketing discipline, Winter Olympics-related expenses, and R&D expenses on gross and operating margins, distinguishing revenue growth from genuine profitability improvement.

• Competition and Strategy FrameworkMoat / competitive advantage

  Multi-Brand, Multi-Segment Portfolio

  The report views the brand portfolio spanning mass-market, premium, and professional outdoor demand as a core advantage of ANTA's business model, believing that differentiated growth among brands can cushion shocks affecting a single consumer group, channel, or short-term weather conditions.

• Event-Driven Strategy and Behavioral FinanceEvent-driven analysis

  Analysis of Weather, Seasonal Changes, and Holiday-Calendar Disruptions

  The report primarily attributes July's sales pressure to abnormal weather and uses the August recovery, autumn product launches, and the Mid-Autumn Festival calendar shift to assess its duration, avoiding the direct extrapolation of a one-off event into a long-term trend.

• Industry/Sector Analysis Framework

  Cross-Regional Outdoor-Participation Benchmarking

  The report compares China's approximately 30% outdoor-sports participation rate with the approximately 60% level in Europe and the United States to illustrate the remaining potential for consumer-base expansion, penetration into lower-tier cities, and upgrades toward functional products.

• Valuation MethodP/E and PEG Valuation

  P/E Valuation

  The report presents P/E ratios from 2024 to 2027, including forecasts of 13.2x for 2026 and 12.0x for 2027, to show the stock's valuation relative to forecast earnings; the report does not provide a current target price on this basis.

• Valuation MethodEV/EBITDA valuation

  Enterprise Value-to-EBITDA Multiple

  The report presents forecast EV/EBITDA multiples of 7.9x for 2026 and 7.0x for 2027 to assess valuation changes through the relationship between enterprise value and operating cash earnings.

Asset mapping & comparison

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

• ANTA Sports Products (02020.HK)

  The report's core research subject; multi-brand operations, growth in outdoor categories, improved channel efficiency, and equity income from Amer Sports collectively support its growth performance.

  Strengths

  1H26 revenue and adjusted net profit both grew 13%, while the operating margin reached a record high of 26.7%; margins increased at FILA, Descente, and Kolon, and store efficiency improved across the major brands.

  Weaknesses

  Mass-market brands recovered more slowly in August; MAIA remains loss-making, and Jack Wolfskin recorded a loss of approximately RMB200 million in 1H26; the core ANTA brand's operating margin was affected by Winter Olympics-related expenses and R&D spending.

  Comparison

  1H26 revenue and adjusted net-profit growth ranked among the stronger results for large-cap consumer companies covered by Morgan Stanley; China's outdoor-sports participation rate is approximately 30%, below the approximately 60% level in Europe and the United States.

  Risks

  The July weather impact on 3Q26, persistently weak mass-market consumer demand, the pace of turnarounds at loss-making brands, and the impact of Middle East geopolitical conditions on overseas expansion.

Key data

• 1H26 Revenue Growth13%Year-over-year growth
• 1H26 Adjusted Net Profit Growth13%Year-over-year growth
• 1H26 Group Operating Margin26.7%Including interest on lease liabilities; a record high for the group
• 2026 Brand Sales GuidanceANTA: low single digits; FILA: mid-single digits; niche brands: above 20%-25%Management maintained full-year guidance
• Morgan Stanley's Assessment of Overall 2026 Sales GrowthHigh single digits to 10%The report believes the company remains on track toward this range
• 2026 Forecast RevenueRMB85,576 millionModelWare estimate; 2025 estimate is RMB78,680 million
• 2026 Forecast EPSRMB5.132025 estimate is RMB4.70, and 2027 estimate is RMB5.62
• 2026 Forecast EBITDARMB22,907 million2027 forecast is RMB24,770 million
• 2026 Forecast ModelWare Net ProfitRMB14,904 million2027 forecast is RMB16,336 million
• Expected Equity Income from Amer SportsApproximately RMB2 billionBased on the upper end of 2026 guidance, an increase of approximately RMB800 million year over year
• FILA Long-Term Operating-Margin TargetApproximately 25%Actual 1H26 margin reached approximately 28%, while the long-term target remains unchanged
• Descente 1H26 Retail GrowthOver 25%Core footwear and apparel grew 40% and 50% year over year, respectively
• Descente Average Monthly Sales per StoreRMB3 millionThe number of stores with annual sales exceeding RMB50 million increased from 49 to 53
• Kolon 1H26 Retail GrowthOver 45%Core hardshell apparel and footwear grew 70% and 80%, respectively
• Kolon Average Monthly Sales per StoreRMB2.8 millionUp from RMB2.25 million in 2025
• MAIA Year-End Store TargetApproximately 70 storesApproximately 50 stores currently
• Jack Wolfskin 1H26 LossApproximately RMB200 millionTargeting profitability in 2027
• Overseas Revenue TargetApproximately RMB2 billion this year; RMB10 billion in approximately five yearsApproximately 500 overseas single-brand stores in 1H26
• Outdoor-Sports Participation Rate in ChinaApproximately 30%Approximately 60% in Europe and the United States
• Closing PriceHK$78.75As of August 26, 2026; 52-week range of HK$66.85-HK$106.30

Impact & implications

The report believes that slower growth in 3Q26 does not automatically imply a change in ANTA's medium-term growth thesis. The relatively rapid August recovery of premium and professional outdoor brands, improved store efficiency across major brands, the group's record-high margin, and increased equity income from Amer Sports collectively strengthen the foundation for achieving its 2026 targets. Longer-term incremental growth will come from expansion of China's outdoor-consumer base, upgrades toward functional products, the integration of Jack Wolfskin, and overseas revenue expansion, although the recovery in mass-market demand, turnarounds at loss-making brands, and overseas execution still require validation.

Risks

• Adverse weather in July is expected to weigh on the 3Q26 performance of most Chinese sportswear companies; if weather volatility persists, the recovery may be delayed.
• Mass-market consumer demand remains weak, and the recovery of mass-market brands in August was significantly slower than that of premium brands.
• MAIA ACTIVE remained loss-making in 1H26, and the operating results of its new store formats, new products, and store expansion have yet to emerge.
• Jack Wolfskin recorded a loss of approximately RMB200 million in 1H26, and its 2027 profitability target depends on the subsequent execution of destocking, closures of underperforming stores, and channel adjustments.
• The Middle East business has been affected by ongoing geopolitical conflicts, with expansion progressing more slowly than originally planned.

What to watch

• Monitor whether September sales can continue to recover with support from autumn product launches, seasonal changes, and the calendar shift of the Mid-Autumn Festival.
• Monitor the pace of recovery among mass-market brands and whether the 3Q26 slowdown is primarily confined to July's weather impact.
• Monitor whether ANTA, FILA, and niche brands can achieve their respective 2026 sales guidance of low-single-digit, mid-single-digit, and above 20%-25% growth.
• Monitor whether FILA can maintain a balance between growth and its long-term operating-margin target of approximately 25%.
• Monitor MAIA's store economics and changes in losses after expanding from approximately 50 stores to approximately 70 by year-end.
• Monitor Jack Wolfskin's new stores in Changchun and Munich, its DTC transition, destocking progress, and its 2027 profitability target.
• Monitor the pace of progress toward overseas revenue of approximately RMB2 billion this year and the target of RMB10 billion in approximately five years.
• Monitor outdoor penetration in lower-tier cities and consumers' transition from basic products toward functional and professional products.