The latest: Sportswear retailer 361 Degrees International Ltd. (1361.HK) announced that retail sales for its core brand grew by a “high-teens” percentage in this year’s third quarter year-on-year, according to a business update released on Tuesday.

Looking up: The company also announced its e-commerce business grew by about 45% during the quarter, representing a slight acceleration from the 40% increase in the second quarter.

Take Note: 361 Degrees recorded retail sales growth of 20% to 25% for its kids-branded products in the latest quarter, much lower than the 37.1% growth in the first half of the year, reflecting a slowdown in the business’ momentum.

Digging Deeper: As one of the top four sportswear brands in China along with Li Ning (2331.HK), Anta (2020.HK) and Xtep (1368.HK), 361 Degrees focuses on smaller second- and third-tier cities that tend to be less profitable than major urban centers, with the result that its gross margin and market capitalization lag behind its three larger rivals. To keep its revenue growing, the company has investedin children’s apparel and its e-commerce platform in recent years, with strong results. Its e-commerce sales reached 780 million yuan (108 million) in the first half of this year, contributing 21.4% of overall sales, while sales of its kids branded products reached 683 million yuan, accounting for about 18.7% of its total just four years after the establishment of the division.

Market Reaction: Shares of 361 degrees initially rose 3.4% on Tuesday, but later gave back some of those gains and closed up 2.2% at HK$3.31 at the midday break. The stock currently trades near the lower end of its 52-week range.

Translation by Jony Ho

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