China Sportswear Observations: Adidas Outperforming

Research evidence excerpt

China Sportswear Observations: Adidas Outperforming

China (PRC) | Apparel, Footwear &

Textiles EquityJulyResearch2, 2026

China Sportswear Observations: Adidas

Outperforming

We conducted checks focusing on brands including Anta, Fila, Li Ning,

Uniqlo China and Adidas China. Overall demand in June was muted. Adidas

China retail sales grew significantly, likely taking market share from Nike.

We remain positive on Li Ning, forecasting better cost and OPEX control in

1H26 as well as long term benefits from the Curry deal. We expect a more

meaningful deceleration by the Anta brand in 2Q26 (vs. 1Q26).

*Overall demand remains muted: The summer retail continues to face pressure in June 2026

mainly due to weak traffic. The silver lining is better-than-feared markdowns: thanks to Nike's

declining supply. Among the major brands we track, We expect a more meaningful deceleration

by the Anta brand in 2Q26 (vs. 1Q26).

*Li Ning: Market concerns are likely overdone: We saw significant consensus earnings cuts

after the Curry deal, which led to share price corrections. However, we remain positive in Li

Ning's long-term outlook:

(1) Better OPEX and cost management: Li Ning's improved management quality is crucial to

its turnaround, in our view. We believe the company executed OPEX and cost management

well in 1H26.

(2) Curry is a long-term growth opportunity: While we do expect initial expenses to start by

2H26, we expect the total expenses to be smaller than market's expectations. We expect the

sponsorship to take a combination of cash, Li Ning's shares and bonus targets based on the

sales of the Curry brands (vs. market expectations of fixed cash payments). We expect the

Curry brand to start its ramp up in 2H26. We expect the brand to launch apparel, and then

footwear.