Nike Profits Decline, Continuously Sell Its Brand

In the context of the overall poor performance of the sports industry, the world's largest

And Nike, a clothing manufacturer, has to continue to streamline its business after closing the shoe factory and stopping cooperation with the foundry. Nike has reached a final agreement with the acquirers. Its two sub brands, UMBRO (Umbro) and Cole Haan, will be sold for $225 million and $570 million respectively.

From the recent situation, Nike's profit has declined continuously.

Sales revenue continued to grow, and the net profit this year is expected to grow by 15% - 17%.

Continuous sale of two brands

According to Nike China's offer to China economic times

In May 31st, Nike announced its intention to divest UMBRO and ColeHaan to highlight key brands Nike, Jordan (Jordan), CONVERSE (Converse) and Hurley.

Nike headquarters said in a press release released in October 24th that UMBRO will be sold to IcOnix Brand GroUP (Inc), the US brand management company, which is expected to be completed by the end of 2012.

"It's a tough decision to sell any business, but this decision will enable us to focus on the areas with the highest growth potential for us," said Mark Parker, President and chief executive of Nike company, Mark Parker.

He thinks UMBRO is still of great value, but ultimately it has to be stripped because of the development of Nike's category strategy.

"The UMBRO market has shrunk, and its popularity and influence have declined a lot.

After Nike acquired UMBRO, it pformed UMBRO's technology, talents, channels and other resources into its own resources, and UMBRO's core resources have been digested.

Ma Gang, an independent critique of footwear industry, thinks.

The final agreement for the sale of UMBRO was less than a month away, and Nike again sold its fashion brand in November 16th.

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In the press release issued by Nike China to Nike headquarters, ColeHaan will be sold to ApaxPartners, one of the world's leading private equity groups with over 30 years of investment experience.

The paction is expected to be completed in early 2013.

Mark Parker's explanation is that "Nike focuses on the areas with the highest potential and return potential, and needs to ensure that these areas are most complementary to Nike's product portfolio".

"Although the global sporting goods market is still growing, the growth rate of the emerging countries that have brought Nike's rapid growth has slowed down."

The key road sports consulting company CEO Zhang Qing analyzed the China Economic Times reporter. Nike originally bought UMBRO for defensive measures against the European market. Now Nike's influence in the football field has been greatly enhanced, so there is a new consideration.

Focus on core business

In the 2012 quarter of fiscal year 7.6%, Nike's net profit fell by 7.6% compared with the same period last year, while product inventories increased by 23%.

According to foreign media reports, Nike has publicly confirmed that the number of new orders in China's key market is decreasing.

Adidas's global sales revenue increased 8% in the first three quarters of this year, while sales in the Greater China region increased by 16% over the same period last year.

Adidas expects net profit growth of 15% - 17% to 770 million euros - 785 million euros this year.

When Nike bought UMBRO 5 years ago, the sports industry was in a period of rapid growth, and now it is stagflation in the sporting goods industry.

And the market concentration is very high. Nike and Adi occupy about 30% of the global market share.

Ma Gang believes that Adidas also has leisure and fashion products, and its contribution to the performance is also relatively large, but it is worth noting that Adidas has a very strict control over the size of leisure fashion products, while Nike has increased the deployment of leisure areas, and its ColeHaan, CONVERSE and heri have leisure fashion products.

In reply to our newspaper, Nike China said, "like any successful company,

Always strive to explore business priorities.

We will further promote the development of Nike brand, Jordan, Converse and Hurley, because we believe that these brands will get unprecedented development opportunities in the future.

Ma Gang also believes that Nike's product line is too wide, in the market downturn, including the domestic sports brand Lining [3.97 1.80%], Anta and so on have chosen to focus on core business.

But 361 degrees chose the opposite way, subdividing the brand of sports life.

"This is also a direction, or a strategy based on peak competition, based on too strong competitors in the professional field."

But Zhang Qing said that the field of leisure is "bitter sea": "light fashion" line, short-term earnings obvious, because the market is good to enter, and coincide with the needs of consumers.

But in the long run, it is to cure poison and quench thirst. Now there are fast fashion brands springing up, plus the combination of network brand and e-commerce, any enterprise can enter the market quickly and low cost.