Xtep posts record profit as Saucony lifts China premium push

Xtep International Holdings  reported its highest-ever net profit for fiscal 2025 on March 26, with earnings attributable to equity holders reaching RMB1,371.6 million (approximately €178 million at current exchange rates) – a year-on-year gain of 10.8 percent that reflects both the expanding contribution of the group’s premium running segment and the removal of the K·SWISS and Palladium drag following their disposal in November 2024.

Professional sports segment accounts for fastest-growing earnings driver

The standout story in the annual results is the professional sports segment, which houses Saucony and Merrell. Full-year revenues reached RMB1,636.0 million (€205 million), up 30.8 percent, while segment operating profit climbed 46.4 percent to RMB114.5 million (€14.4 million). The segment now accounts for 11.6 percent of group revenue, compared with 9.2 percent a year earlier.

Saucony, positioned at the premium end of China’s running market, crossed RMB1 billion (€125 million) in annual revenue for the first time in 2024 and has continued building on that milestone. The brand operates 175 stores across mainland China and is expanding into upscale mall locations, pairing store format upgrades with apparel and lifestyle extensions designed to attract elite consumers and social runners beyond the performance-footwear core.

Core Xtep brand grows modestly as online price wars squeeze margins

The core business expanded, but not without friction. Group revenue from continuing operations reached RMB14,151.1 million (€1.77 billion), up 4.2 percent, while the Xtep brand itself advanced a more modest 1.5 percent to RMB12,515.1 million (€1.57 billion). The gap tells a familiar story in Chinese sportswear: online channel growth is real, but the discounting required to compete on platforms like Tmall and JD.com is eating into returns. Gross profit margin slipped 0.4 percentage points to 42.8 percent as a result. Operating profit across the continuing business rose 2.7 percent to RMB2,018.8 million (€253 million).

The digital picture is more nuanced than the margin pressure suggests. Live-streaming via Douyin and WeChat Channels grew approximately 40 percent, cementing their status as the group’s highest-velocity retail formats. More striking still is the cross-border number: overseas e-commerce expanded more than 220 percent, powered by Southeast Asian platforms Shopee, TikTok and Lazada. For a brand that has historically been almost entirely China-dependent, that trajectory — however small in absolute terms today — points toward a genuine diversification story worth watching.

Marathon record anchors performance credentials at home

Brand-performance proof points continue to reinforce Xtep’s positioning in China’s running boom. In March 2026, athlete Feng Peiyou – running in the 160X 7.0 PRO – clocked 2:05:58 at the Tokyo Marathon, breaking the Chinese national record and finishing as the fastest Asian runner. The group now holds the number-one wear rate across six flagship domestic marathons, including World Athletics Platinum Label events in Xiamen and Beijing – a metric it uses to demonstrate relevance with both elite and mass-market runners.

The running community infrastructure underpins this standing: 71 Xtep Running Clubs across China and over 6,200 affiliated runners’ groups serve as both a distribution channel and a loyalty mechanism connecting the brand directly to its target audience.

Xtep clears the decks, and now has the cash to back its DTC bet

The numbers moved sharply in 2025. Net cash surged 73.4 percent to RMB1,707.0 million (€214 million), the single biggest year-on-year liquidity improvement in recent memory — and one that owes as much to strategic housekeeping as to trading performance. Offloading K·SWISS and Palladium through the KP Global disposal removed a loss-generating asset that had been masking the underlying strength of the continuing business.

What matters now is what management does with the firepower. The answer is already on the table. In February 2025 Xtep issued a HK$500 million convertible bond (€55.4 million), with proceeds directed at three things: accelerating the direct-to-consumer (DTC) rollout across both the Xtep and Saucony brands, deepening Saucony’s product and branding investment in China, and funding the working capital demands of the transition.

DTC is not a peripheral initiative here — it is the strategic pivot on which the group’s medium-term margin story depends, giving Xtep direct access to sell-through data, consumer behavior and a retail margin it currently shares with distributors. With the balance sheet in its strongest position in years, management has the runway to push that transition without returning to capital markets in the near term.

What the results reveal about the Chinese competitive picture

From our Sporting Goods Intelligence Europe point of viewt of view, the most commercially significant signal in Xtep’s results is the speed of Saucony’s scaling in China. Moving from under RMB600 million (€75 million) in H1 2024 revenues to an annualised run rate now above RMB1.6 billion (€201 million), the brand is emerging as a genuine second growth engine.

This mirrors the parallel ambitions of Li-Ning with Arc’teryx and Anta with Salomon, as they seek premium, Western-heritage running labels as growth vehicles within China’s performance market. Xtep’s DTC push into first- and second-tier cities positions it directly against On Running, Asics and, increasingly, Lululemon. Lululemon, in particular, commands significant share among the social-runner female demographic in Tier-1 cities that Saucony’s lifestyle extensions are now explicitly targeting.