Nike'S Gross Profit Margin Declined For 7 Consecutive Quarters Or Reduced Due To New Orders In China.

In the environment of slowing economic demand, Nike, the world's largest sports product maker, reported that its profit margin declined in the first quarter of fiscal year 2013, mainly due to the growth of indirect costs.

Meanwhile, foreign media reported that Nike has publicly confirmed that China is the key.

The number of new orders is decreasing.

According to the financial report, Nike's net profit was $567 million and earnings per share were $1.23 for the quarter ending August 31st.

In the first quarter of fiscal 2012, Nike's net profit was $645 million and earnings per share were $1.36.

Its gross profit margin was 43.5%, down from 44.3% in the same period last year, declining for the seventh consecutive quarter.

Nike said that the increase in input costs in the first quarter offset the benefits of price increases and cost reduction measures.

Many analysts say that Nike has increased its marketing expenses mainly because of the key product innovation plan, and has provided support for the Olympic Games and the European Championships. At the same time, the fluctuation of the global economy has also increased pressure on its cost.

In the first quarter, Nike's business overhead cost increased by 18%.

Meanwhile, the slowdown in China's key market has also given Nike a lot of pressure.

Nike's first quarter revenue in the Greater China region was $572 million, an increase of 8% over the same period last year. Its impact on exchange rate movements was 7% over the same period last year, and the growth rate was slower than the same period last year.

The above media reported that Nike said the number of new orders in the Greater China region (including the Taiwan and Hongkong SAR) fell 5% year on year, and all retailers in China faced the problem of slowing economic growth and overstock, and consumers became more sophisticated.

The Chinese market is of great significance to Nike.

In the 2012 fiscal year, Nike's total sales in China amounted to $2 billion 500 million, accounting for over 10% of its total sales.

Some investment banks estimate that the Chinese market has contributed 30% of Nike's operating profit.

However, in the fourth quarter of fiscal year 2012, the sales revenue of Nike China has declined. The total sales revenue of products in Nike Greater China, including footwear, clothing and accessories, is US $667 million, which is 3.89% lower than that in the third quarter.

Morgan Stanley report shows that in the fourth quarter of fiscal 2012, Nike's global orders growth slowed from 18% to 12%, and China's orders grew from 20% to 2%.

Meanwhile, Nike's stock has started to grow in the same period.

By the end of 5 in 2012, its stock amounted to US $3 billion 350 million, compared with us $2 billion 715 million last year, an increase of 23.39%.

For BELLE and 01880.HK, the main distributors of Nike and greater China in, inventory pressure has also increased.

Baosheng international interim report shows that its inventory has reached $554 million, up 37.16% over the same period last year.

BELLE international also reported in the China Daily that in the first half of this year, the overall inventory level was more than the same period last year, and the gross margin space was squeezed.

A study in a university in Shanghai

The management scholar told reporters that there is a direct reason for Nike's problem in China, that is, its agents are very strong, taking the goods discount too low to squeeze Nike's profits.

"At present, Nike is increasing the strength of China's factory stores and online stores to reduce inventory."

Nike executives also said they would work with retailers to clean up stocks, improve distribution through Nike stores, and adjust product designs according to the tastes of Chinese consumers, and "restart" the market in China.

The other giant Adidas, which compared global sports brands, also experienced a severe test of product backlog after 2008, resulting in a 95% decline in net profit in 2009.

However, Adidas made careful inventory of its inventories and dealers, and ventured to replace old ones with new ones.

When the dealer handles inventory to a certain amount, the company gives a certain amount of compensation and allows dealers to open discount stores.

Today, Adidas has 7000 stores in China. The results show that Adidas's quarterly net profit has increased by 38%, and its revenue has increased by 14%.

Among them, China's market sales amounted to 385 million euros, an increase of 26% over the same period, accounting for the first time that global sales accounted for more than 10%.

Sales growth in Western Europe, North America, other Asian countries and Latin America were 7%, 11%, 26% and 14% respectively.

At the same time, the local sports brand is also affected by the continuous high inventory and the dragging down of the depressed economic environment.

Data show that in the first half of the year, except for XTEP's small revenue increase, Anta fell 11.6% compared to the same period last year, 361 degrees down 10% compared with the same period last year, PEAK reduced 28.5% compared with the same period last year, China's trend decreased by 29.4% compared with the same period last year, and Lining net profit fell by more than 80%.

The sharp decline in performance is closely related to huge inventory.

Jin Zhenjun, who has just joined the Lining group, openly acknowledged that the inventory clearance was insufficient in the first half of the year.

On the other hand, we can see from the published order meeting in the first quarter of 2013 that the order amount of Anta has been reduced by 20%~30%, XTEP has also decreased by 15%~20%, and the amount of clothing orders of PEAK has also declined.

An industry watchdog said yes.

This kind of international brand is still optimistic in China's future development. "Since its main market is mostly in a second tier city, once its channel is done, it will be a new growth."

According to the source, Nike has launched some products in its attempt to expand the three or four line market in China.