Acquisition of Jack Wolfskin finally announced

安踏体育(02020)\r

1Q25was slightly better than expected.And despite the weak macro andweather in Apr2025MTD,we are still cautiously optimistic about the trend in2Q25E.For the Jack Wolfskin’s deal announced on10Apr2025,we do thinkthe acquisition price is attractive and the potential there(mid-priced outdoorindustry and the expansion to Europe)is meaningful.Maintain BUY but trim TPto HK$119.08,based on24x FY25E P/E(unchanged).The stock is trading at17x,still attractive,in our view.\r

Anta’s retail sales growth was inline in1Q25;inventory improved withhigher discounts.Anta reported a HSD retail sales growth in1Q25(HSD/HSD/low-teens for Anta adults(offline+online)/kids(offline+online)/E-commerce),which is inline with CMBI est.and FY25E guidance,and alsosimilar to that in4Q24.We do find this number satisfactory given the highbase last year(esp.for online).Inventory to sales ratio was at4.5to5.0months in1Q25,similar to1Q24but improved from the5months in4Q24,which was slightly better than expected and we also believe the excessiveinventory left over from the2024-2025warm winter has mostly beencleared.However,the retail discounts kind of deepened a little bit for onlinechannel(by1-2ppt to28%off)YoY and QoQ while that for offline channelwas rather flattish YoY and QoQ in1Q25.\r

FILA’s retail sales growth was better than expected in1Q25;inventorystayed flattish but discounts widened.FILA also reported a HSD retailsales growth in1Q25(MSD/low-teens/mid-teens/20%+for FILA adults(offline+online)/kids(offline+online)/Fusion(offline+online)/E-commerce),better than CMBI est.and FY25E guidance of MSD,and similarto that in4Q24.We are rather impressed by the rapid growth for kids andfusion,with both having been benefiting from the reforms on products’design last year.Inventory to sales ratio was at5months in1Q25,similarto that in4Q24but lengthened a bit vs1Q24.Retail discounts for onlinechannel deepened(by1-2ppt to40%off)YoY while that for offline channelwas at26%off,same as that in4Q24but widened by2ppt vs1Q24.\r

Other brands’retail sales growth,inventory and retail discounts allremained exceptionally strong in1Q25.Other brands’retail sales growthwas at65%to70%in1Q25(about60%/around100%/30%+for Descente/Kolon/Maia active),way better than FY25E guidance of30%+.Inventory tosales ratio for Descente/Kolon was at5to6months/4months,which is afairly healthy or even low level,to some extent.However,all in all,the retailsales growth of Anta group in1Q25should be at mid-teens,which is notonly better than the Company’s target,but also ahead of CMBI est.salesgrowth of about10%.And as a result,the profit margin should also be betterthan expected.