Nike and Uniqlo Supplier Shenzhou International Warns of Tariff Impact Despite Higher Profit

Shenzhou International Group Holdings, a major contract manufacturer for Nike, Adidas, Puma, Uniqlo, and Lululemon, reported a significant jump in earnings for the first half. However, despite the positive results, the company's shares fell sharply due to concerns over tariffs. The company is a major supplier to the US athletic brands and several others. The warning on tariffs was the main reason for the decline in shares.

Shenzhou International Group Holdings Limited (HK:2313), a major contract manufacturer for global athletic brands including Nike, Adidas, Puma, Uniqlo, and Lululemon, reported robust earnings for the first half of 2025. The company's sales increased by 15.3% to approximately RMB14.97 billion, with the sportswear segment contributing 67.7% of total sales and seeing a 9.9% revenue increase [1]. Despite a slight decrease in gross profit margin to 27.1%, net profit rose by 8.4% to approximately RMB3.18 billion [1].

The company's interim dividend was increased by 10.4% to HK$1.38 per share [1]. Analysts remain bullish on the stock, with a Buy rating and a HK$64.00 price target [1]. However, despite the positive earnings, Shenzhou International's shares fell sharply on Wednesday due to concerns over tariffs. The company is a significant supplier to US athletic brands, and the warning on tariffs was the main reason for the decline in shares [3].

The earnings report highlights the company's strong performance in the sportswear segment, which is a significant driver of its revenue. However, the potential impact of tariffs on its business model remains a concern for investors. Shenzhou International will need to navigate these challenges to maintain its growth trajectory and investor confidence.

References:
[1] https://www.tipranks.com/news/company-announcements/shenzhou-international-reports-strong-h1-2025-results-with-increased-sales-and-profits
[2] https://www.marketscreener.com/news/shenzhou-international-group-holdings-limited-reports-earnings-results-for-the-half-year-ended-june-ce7c50dedd8af02d
[3] https://asia.nikkei.com/economy/trade-war/trump-tariffs/chinese-producer-for-nike-uniqlo-warns-on-tariffs-despite-higher-profit2