Xtep's 2025: Main brand growth slows down, DTC challenges may be delayed but are inevitable

Xtep International’s total revenue for 2025 is expected to reach RMB 14.151 billion, a year-on-year increase of 4.2%.

After excluding the profit and loss impact of terminated operations (K·SWISS and Palladium), the profit attributable to ordinary equity holders is projected to be RMB 1.372 billion, a year-on-year increase of 10.8%, setting a new historical high.

From a business structure perspective, the core “Xtep” main brand revenue is RMB 12.515 billion, with a year-on-year growth rate of only 1.5%, further slowing compared to the percentage in 2024.

In contrast, the professional sports division, consisting of Saucony and Merrell, grew by 30.8% year-on-year to RMB 1.636 billion, with operating profit increasing by 46.4% to RMB 114 million, outlining the contours of a “second growth curve.”

Faced with the trend of peak sales growth for the main brand, Xtep International’s strategic transformation is urgent.

The company is drawing on Saucony’s successful experience in DTC transformation, intending to replicate this on a large scale within its main brand sales channels.

Xtep has stated that it plans to reclaim distribution rights from about 400 to 500 authorized distributor stores in the second half of 2025 and 2026, enhancing operational efficiency through direct operation of flagship stores.

To this end, in February 2025, Xtep International raised HKD 1 billion, primarily for further development of the Xtep main brand and Saucony’s DTC business model.

However, the channel pressure brought by the transformation has begun to show preliminary signs.

The channel inventory turnover days for the Xtep main brand extended from “about 4 months” in 2024 to “about 4.5 months” in 2025. Analysts point out that the slower turnover may be affected by multiple factors, including the slowdown in retail growth of the main brand and the “channel stockpiling” effect before the DTC transformation.

Meanwhile, the group’s gross margin for continuing operations in 2025 is 42.8%, a slight year-on-year decrease of 0.4 percentage points, reflecting that profit margins are being squeezed during the process of increasing direct operations and clearing inventory.

Global performance has become a significant highlight for Xtep in 2025.

In 2025, Xtep’s overseas business revenue nearly doubled, with cross-border e-commerce achieving over 220% growth driven by strong performance on mainstream Southeast Asian platforms such as Shopee, TikTok, and Lazada.

During the year, Xtep opened its first overseas running club in Singapore and partnered with Malaysia’s Bonia to open a running flagship store, gradually shifting its overseas layout focus towards online penetration and all-channel expansion.

Rooted in the fiercely competitive sports goods sector, Xtep is strengthening its image as “China’s No. 1 Running Brand” to solidify its customer base.

In 2025, the group deepened its connection with professional runners by sponsoring 74 running events and expanding 71 running clubs; on the product side, it achieved full coverage from elite racing to the mass market with the “160X 7” series and “Qingyun” series.

For Xtep, while the strategic focus after divesting loss-making businesses is starting to show results, inventory control and store efficiency improvement under the DTC model remain core challenges for the coming year.

Whether it can convert profit growth into a long-term brand moat still depends on its actual control level over terminal channels.

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