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Sector Update: Sportswear: Robust Growth Prospects Amid Intensifying Competition

The sportswear industry has solid growth prospects. Demand is underpinned by the increasing number of women in sports, the casualization of dress codes, and continued penetration in APAC. Short-term challenges in 2024 relate to how quickly consumer confidence recovers. Competitive pressures will remain high; from local brands such as Anta in China, newer brands such as OnRunning and Hoka, and well-performing brands like lululemon and New Balance. We expect volumes and product innovation will drive growth in 2024, with a moderate price contribution as inflation eases. A step up in marketing expenses to support previous price hikes and promote new products could weigh on profitability expansion. As inventory levels gradually normalize, we expect a more subdued promotional environment.