Do Sports Shoes Become Retail Bubbles?

There are already indications that those in the retail sector have always been invincible.

It has already shown some bad signs in the current round of sportswear retail bubble.

The $32 billion 400 million monster, according to its latest quarterly figures, is sinking into the plight of Morgan Stanley's "increasing resistance".

The company is carrying several very core issues, the most serious of which is overstock.

The company admits that getting rid of excess inventory has had many negative effects on the company's performance, which has led to a decline in sales margins.

"When we enter the next quarter, we hope to reduce our excess inventory to a reasonable range through our factory shops and select valuable third party channels," said Nike chairman Trevor Edwards at a recent earnings call conference.

With such a well-known brand and so fast growing revenue, Nike has the ability to hide all these problems.

In fact, the brand also defends his high inventory and explains how the company brings new products to boost consumption.

Constant innovation is the link between the brand's vitality and its vitality, from damp proof clothes to sports shoes that tie shoes automatically.

UnderArmour

Recently, behind the rapid growth of Under Armour, its profit is declining.

(this is the brand's sustained revenue growth for 25 consecutive quarters, especially in this quarter, close to 28% gain).

Like Nike, the company is hiding all its problems under a strong and consumer favorite brand and giving it the promise of expansion.

It pioneered a new type of store. FAO Schewarz once called it "home" - a concept that combines experience and traditional retail, and it is also trying to cultivate a gospel spirit.

At the same time, the company is also facing a crazy and chaotic expansion plan, and women's sportswear parts are facing Lululemon challenge.

Part of the decline in profits is due to the weaker profit margins. On the other hand, the result of designing the pformation of product structure is a long-term challenge.

And because of the strong dollar, it has a very negative impact on the profits of international businesses.

For the importance of Under Armour internationalization expansion, this may continue to bring downward pressure on profits this year, "HakonHelgessen, an analyst at consulting firm Conlumino, wrote to customer reports.

"Aside from its bottom line challenges, Under Armour still has a very good growth potential in its international and domestic businesses.

"He wrote.

Under Armour, compared to Nike, is a very small young company. At this point in time, it faces a crucial juncture.

"We can see that with the continuous breakthroughs in revenue and the continuous increase in the corresponding profit margins, will they continue to invest in innovation and the involvement of their marketing team in the development of new countries?" Betty Chen, managing director of Mizuho Securities, Q & A, "I think those are very important and outstanding issues."

There is also a lot of doubt about the development trend of sports apparel industry.

Recently, UBS also pointed out that the sportswear season, in general, has an overall crumbling and claims that for the second fiscal year of 2016, "the most difficult fiscal quarter of the US sports retailing industry" was mainly the remaining high inventory which was dragged down by holiday sales in 2015.

UBS also highlighted the bankruptcy of Sports Authority in the early part of this year, which is also an important factor in the recent overall industry plight.

Under Armour also published a quarterly earnings call conference, saying that the drop in revenue 39% was mainly related to the liquidation of Sports Authority.

"The robbery between them and the wholesalers' channels is flexible," Chen told Business Insider.

But for millennial researchers and analysts, how these sportswear brands quickly catch young consumers, they sell more than just clothes: they also sell scene based assembly (such as running clubs and new concept retail stores mentioned earlier), and these are tightly centered around the thriving community marketing concept.

Compared with many North American sportswear brands, Adidas, the industry's biggest European competitor, released its second quarter results on Thursday, showing that its revenue grew by 21%, the only industry in the industry that felt no need to worry about the bubble.

Due to fears that consumers' enthusiasm for sportswear will soon end, the company cancelled its revenue and profit guidance last year.

At present, net income is expected to be between 35% and 39%, probably between 975 million euros and 1 billion euros.

Compared with previous forecasts, it has an increase of 25%.

For most consumers, the importance of health is constantly improving. This also helps sportswear become the only category that consumers are willing to buy at full price.

Therefore, more and more small sportswear brands began to emerge from Outdoor Voices to Yogasmoga.

For famous brands, all these rising stars are still very small players.

In general, the industry is controlled by the sports scene rules created by Under Armour, Nike, even Lululemon.

(it is interesting that Lululemon also has a backlog problem).

"We really believe that companies like Lulu, Nike and Under Armour will have an advantage, because they have the ability to attract two types of consumers, leisure sports customers or professional sports fans, who spend most of their leisure time on weekends and go to running," Chen said. "If you are a real sports fan, you really want to wear sportswear to support and strengthen your sports performance. When you exercise, you feel more comfortable, but at the same time you need some pleasing factors."

Chen points out that competitors like Puma, like the famous young generation's idol Rihanna and Kylie Jenner, have attracted many fashion consumers who are not so professional in sports.

Of course, when most retailers collapse, the growth of sportswear retailers' income and positive comparable sales are always much better than those of apparel retailers who do not have good performance.