Summary of Key Points
Tebu's financial report for the first half of 2026 presents a stark contrast of "extreme opposites": On one hand, its premium brand, Sokoni, and its overseas operations have seen rapid growth (the revenue from Sokoni's professional sports business increased by 11.4%, and overseas revenue doubled), leading to the group's overall gross margin reaching a five-year high (46.4%) along with substantial cash flow. On the other hand, the group's total revenue decreased by 0.6%, and net profit was nearly 100 million yuan lower, with profits being eroded by soaring operating expenses. The main brand also faces challenges such as a heavy reliance on footwear and a competitive market. Essentially, Tebu is in a period of transition, both in terms of breaking into the premium market and transforming its distribution channels. Sokoni has demonstrated its ability to manage a premium brand, but the company still needs to find another growth driver that can support the overall performance.
I. Sokoni: Tebu's Premium Ace, Yet Not Yet Large Enough
Sokoni is Tebu's most impressive "new story." It has not only helped Tebu enter the high-value customer segment (with a gross margin of 55.5%, 10 percentage points higher than the main brand) but has also established a strong presence in the professional running community, ranking first among international brands in the wear rates at the Xiamen and Wuhan marathons and even making it into the top three overall.
However, Sokoni's weakness is also clear: its scale is still too small. The revenue from the professional sports business (including Sokoni and Mailai) amounted to 875 million yuan, accounting for only 12.9% of the group's total revenue. The main brand's loss of 133 million yuan in revenue was only partially offset by Sokoni's contribution of 90 million yuan. Moreover, Sokoni's operating profit margin is only 10.4%, far lower than the main brand's 18.9%, due to the high costs associated with premium positioning—high rent in key shopping areas, exquisite decoration, event marketing, and research and development for new product lines such as clothing.
Sokoni's expansion strategy has shifted from "rapid opening of stores" to "improving quality and efficiency." This year, only 5 new stores were opened, but an image store was set up at K11 in Hong Kong, targeting core shopping areas in high-tier cities. This indicates that future growth will rely on higher sales per store and customer repeat purchases, which is more challenging but also more sustainable.
II. Gross Margin Hits a High, but Profit Drops—Where Did the Money Go?
Many may wonder: If the product prices have increased (with the gross margin rising by 1.4 percentage points) and cash flow is good (net cash of 2.3 billion yuan, up 36%), why did profits decrease by 10.5%?
The answer is that operating expenses have eaten into the profits. Although Tebu's gross margin increased by 81 million yuan, sales and administrative expenses surged by 200 million yuan, raising the expense ratio from 31% to 34.2%. These expenses were mainly incurred in:
- DTC (Direct to Consumer) transformation: Tebu is now dealing directly with consumers, managing inventory, and bearing logistics and platform fees, rather than relying on distributors.
- Stock-based compensation: Last year, 21 million yuan was reinvested in compensation expenses; this year, 43 million yuan was spent, resulting in a net difference of 64 million yuan.
- Slow inventory turnover: The time it takes to sell inventory has increased from 94 days to 104 days, tying up capital.
Even excluding the impact of stock-based compensation, profits still decreased by 6.2%, indicating that the costs associated with the channel transformation are indeed significant.
III. Overseas Business Doubles: Can It Become the Next Sokoni?
The overseas business is another highlight for Tebu, with revenue doubling again this half-year, and e-commerce sales in Southeast Asia increasing by 220%. Tebu has also opened flagship stores in Indonesia and Malaysia.
Its approach is similar to that in the domestic market: using professional running shoes to build recognition, attracting customers through marathons, and selling products online (on platforms like Shopee and TikTok) while opening physical stores for experiences. The running market in Southeast Asia is still developing, and Chinese brands have an opportunity. However, the base is small, with management targeting an overseas revenue contribution of only 5%-10% over the next five years. The current doubling of revenue is not significant for the group's total revenue of nearly 6.8 billion yuan. Additionally, overseas expansion is costly (opening stores, training teams, and conducting marketing), so it remains to be seen how much profit can be generated.
IV. Challenges for the Main Brand: Heavy Reliance on Footwear and Competitive Market
Tebu's main brand faces several issues: clothing revenue decreased by 5.9% this half-year, with footwear accounting for nearly 63% of total revenue, indicating a growing dependence on this product category. The running shoe market is becoming increasingly competitive:
- Slowing Growth: Online sales of running shoes declined for the first time in the fourth quarter of 2025 and continued to decline in the first quarter of 2026.
- Fierce Competition: Brands like Nike and Adidas are aggressively discounting to clear inventory, while domestic brands like Anta and Li Ning are focusing on their professional lines. International premium brands such as Asics and HOKA are also competing for market share.
Although Tebu's footwear revenue increased by 2.8%, the days of easy profits are over. Any issues with footwear sales could affect the entire group.
V. Tebu's Strengths and Next Steps: Replicating Sokoni's Success
Tebu's greatest strength is its substantial cash flow (2.3 billion yuan in net cash), which allows it to withstand the challenges of transformation. Management has also lowered its annual revenue forecast, preparing for possible adjustments.
The key lies in replicating Sokoni's success across other areas:
- Can the overseas business transition from high growth to high profitability?
- Can Mailai, another professional brand, achieve similar success?
- Can the main brand's DTC transformation improve inventory turnover and reduce expenses?
Sokoni has proven that Tebu can manage a premium brand; the next step is to turn this success into a group-wide capability. By finding another growth driver, Tebu can overcome its current limitations.
In summary, Tebu has both strengths and challenges: Sokoni and its overseas operations are positives, while high expenses and the main brand's dependency on footwear are weaknesses. With sufficient cash flow and the ability to replicate successful strategies, the company has the potential to turn its profits into a more substantial overall performance. The future depends on its ability to convert higher gross margins into net profits and strengthen its new businesses.