Falling Sales In China Alarm Nike

Analysts pointed out on Friday that the decline in China's sales volume for the Nike (NKE) has set the alarm bell.

For Nike, the Chinese market has become the "special child" of the company recently, and it is also the biggest headache. Although many Western brands are drooling over the huge Chinese market, the importance of the Chinese market is not very high for the profits of these companies. But for Nike, the situation is different. Nike chief executive Mark Parker (Mark), explaining the latest quarterly earnings report, said the company's "two big stories still remain in China and North America".

Although Nike's share and growth momentum in the North American market are growing, this growth comes mainly from Nike's Jordan basketball. shoes And FlyKnit seamless running shoes), but the company's sales in the Chinese market declined last quarter. In fact, in the past fiscal year, sales of Nike did not include exchange rate changes in almost all markets, even in Western Europe, but only in the Chinese market.

Parker said: "the competition in the Chinese market is a marathon, not sprint." He pointed out that the reason why Nike was frustrated in the Chinese market is that the overall growth rate of China's economy has slowed down. In addition, overstock and the pressure of price reduction brought by competitors are also putting pressure on Nike.

At the same time, Nike is still facing difficulties in making its products suitable for the taste of Chinese consumers. By contrast, Nike's biggest competitor, Adidas (ADS), has launched a full range of products that resonate with Chinese shoppers. Nike's sales in China have declined, while Adidas's sales have increased, which means Nike's market share is being occupied by Adidas. Some analysts point out that Adidas from Germany may take the place of Nike as the leader in the Chinese market.

"It's already a wake-up call for Ewing Nike," said Christopher Svezia, an analyst at Susquehanna Financial Group, in an interview with Hanna Group. "The taste of Chinese consumers is getting higher and higher," he said. "It is no longer" what I want. "

Nike's sales in the Chinese market are about $2 billion 500 million, accounting for 10% of the company's total sales. Nike's total sales in the North American market exceeded $10 billion last year. However, Sylvia expects Nike's EBIT from the Chinese market to account for 1/4 of the company's pre tax profit, which means that for Nike, the profitability of the Chinese market is higher than that of the North American market.

"For Nike, China is a very important market and its profitability is very high," he said. In order to improve the demand of its products in the Chinese market, NBA superstar Lebron James (Lebron James) and Kevin Durant (Kevin Durant), who have signed contracts with Nike, will visit China this summer.