Key Performance Highlights for the First Half of 2026: A Cool Down
Xtep Group’s performance in the first half of 2026 was disappointing, with revenue declining by a mere 0.6% and net profit falling by 10.5%. What’s more concerning is the reduction in the number of its running clubs, which it has been operating for over a decade—8 clubs were closed, reducing the total from 71 to 63. Interestingly, the company did not disclose any relevant data in its mid-year report. This contraction is not a minor issue; it indicates a weakening of Xtep’s “equipment + social interaction + service” ecosystem. The reasons behind this include franchisees exiting due to the situation where they have sales but no profits, the disappearance of product differentiation (old, low-priced online models impacting club profits), and a blurring of the brand’s identity among consumers (lack of a sense of “must-have” among customers). Additionally, the growth rate of its specialized sports divisions, such as Sokoni, has slowed down, as the running market has entered a phase of competitive stalemate, putting Xtep’s competitive advantages under pressure.
1. The Shrinking Number of Running Clubs: A Weakening Link in the Ecosystem
Xtep’s running clubs are more than just ordinary retail stores; they are located in parks, gyms, and other key running locations. They serve as places to sell professional running shoes and as offline hubs for runners to socialize (providing storage, shower facilities, and organizing events). Over the past decade, these clubs have been a crucial part of Xtep’s “running ecosystem.” By targeting core runners through these clubs and building communities with high-quality products and services, Xtep has been able to strengthen its brand.
However, with 8 clubs closing in the first half of the year, the direct reason for franchisees’ departure is the lack of profitability. For example, while clubs mainly sell professional running shoes (such as the 160X series), the e-commerce department continuously reorders old models (like the 160X 3.0 PRO) at significantly lower prices (often at a 60% discount of the list price), leaving clubs with only a 45-55% discount. As a result, franchisees cannot make a profit from selling these products, which essentially squeezes the clubs out of the market.
2. Performance in the First Half of the Year: Both the Main Brand and Secondary Growth Channels Slow Down
Xtep’s revenue for the first half of the year was 6.795 billion yuan (a 0.6% decrease), and net profit was 818 million yuan (a 10.5% decline). The issues lie in two main areas:
- The main brand (responsible for 87% of revenue): Revenue decreased by 2.2%, and operating profit fell by 7.3%. Revenue from clothing and accessories decreased by 150 million yuan and 10 million yuan, respectively, dragging down overall performance. Although the revenue from footwear increased to 62.9%, the growth was weak.
- Specialized divisions like Sokoni: Once a strong growth driver, Sokoni’s growth rate slowed from over 20% in the first quarter to just single-digit figures in the second quarter. This indicates that it has failed to contribute significantly to the group’s overall growth.
3. Product Pricing Issues: Old Models Driving Down New Models
Xtep’s 160X series is a flagship product in the running category, with annual iterations (the 8th generation in 2026). However, the 160X 3.0 PRO, which became extremely popular when an athlete set a record with it, is still selling well. Xtep is reluctant to discontinue production and has continued to restock or release upgraded versions (such as the 3.5 PRO), resulting in online prices being reduced to around 500-600 yuan (compared to a list price of 1299 yuan), which is more than half the price of the newer 8.0 PRO model (1299 yuan).
This situation creates two problems: franchisees cannot compete on price (40% discount online vs. 45-55% discount in clubs), making it difficult for them to sell products; moreover, it lowers the perceived value of Xtep’s flagship shoes among consumers, who may think, “The old model is only 500 yuan, while the new one is 1299 yuan? That’s not worth it,” which negatively affects new model sales and undermines the brand’s premium image.
4. Blurring of the Brand Identity: Lack of a “Must-Have” Factor
Xtep’s former strength was its “half the price for the same quality” proposition, but this advantage is fragile as competitors can easily engage in price wars. The question is, do consumers buy Xtep products because of their low cost or their quality? The answer is unclear.
For instance, Sokoni, a century-old professional running brand, represents a different approach to running culture. Xtep aims to transform it into a symbol of an elite lifestyle, but the challenge is to convince urban elites of its professionalism rather than just treating it as a fashion brand. If the transformation focuses too much on fashion, it may lose its credibility among running enthusiasts. Consumers buy high-end running shoes for their status and the sense of professionalism they represent, and Xtep currently lacks this essential factor that would make its products “must-haves.”
5. The Running Market: Moving from Growth to Stalemate
The running shoe market is now saturated, and there’s no longer room for easy profit-sharing. Brands are competing for uniqueness—do they offer something that others don’t?
Xtep’s running ecosystem used to be a competitive advantage, but with the decline in club numbers, internal product issues, and a blurred brand identity, this advantage is weakening. Competitors (such as Li Ning and Anta’s running divisions) are also gaining momentum. If Xtep cannot quickly resolve its profit issues and clarify its brand positioning, it may lose its edge in this competitive environment.
In Conclusion: Xtep’s problem is not about the inability to sell products but about how to maintain runners’ trust and loyalty. The reduction in running clubs is a sign that there are issues with the core aspects of its ecosystem. The company needs to reevaluate its product strategy, support for franchisees, and brand messaging to establish a solid foothold in the current competitive market.