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Earnings turnaround, structural improvement, and shareholder returns

4Q25 preview: Start of a turnaround

For 4Q25, we expect Misto Holdings to deliver above-consensus results, with revenue of W860.2bn (flat YoY) and operating profit of W18.1bn (swinging to profitability). The US business is operating with minimal staffing and inventory (with most remaining inventory having been cleared in 3Q25); as a result, the earnings drag from the US business is likely to decline sharply from 4Q25 onward (US net losses: W111.6bn in 2024, W43.8bn in 1Q-3Q25, and an estimated W3.4bn in 4Q25).

A full-fledged earnings turnaround should begin in 2026, supported by the completion of US business restructuring, a recovery in domestic earnings, and steady growth at Acushnet. Under its five-year plan announced in 2022, the company targeted revenue of W4.4tr and an OP margin of 15?16% by 2026. We estimate 2025 revenue at W4.4tr, implying early achievement of the revenue target. Meanwhile, our 2025 OP margin estimate is 11%, suggesting that margin improvement will be the company’s key strategic focus in 2026.

Non-FILA brands gaining momentum

The FILA brand is showing a gradual recovery in the domestic market. Following the success of the Echappe sneaker line, subsequent models have also gained popularity, lifting footwear’s share of total FILA brand revenue to around 50%. With mix improvements underway, revenue growth has resumed this year.

Beyond FILA, brands such as Matin Kim, Marithe Francois Girbaud, Raive, and Rest & Recreation are driving additional growth, including through overseas distribution. In 1Q-3Q25, cumulative non-FILA brand revenue reached W115.6bn (+86% YoY), with their contribution to the Misto division growing sharply from 9% to 19%.

Robust shareholder returns

The company previously announced plans to return up to W500bn to shareholders in 2025?27. In 2025, the firm has already bought back W180bn worth of shares and paid out W50bn in special dividends, totaling W230bn (46% of the 2025-27 plan). In addition, the company recently decided to cancel all of its currently held treasury shares (11.7% of shares), showing a strong commitment to enhancing shareholder value.

Reflecting our upward earnings forecast revisions and the treasury share cancellation, we raise our target price to W60,000 (from W55,000). With the stock trading at a 12-month forward P/E of 9x, valuation has become more attractive. We maintain our Buy rating.