NIKE Has No Real Rivals, But Great Changes Are Taking Place.

The world's largest sporting goods group Nike (NYSE:NKE) today released its second quarter results in 2017. In the 3 months ended November 30, 2016, Nike net profit increased 7% to 842 million US dollars compared with the same period last year, and revenue rose 6% to 8 billion 180 million US dollars over the same period, higher than the expected US $8 billion 90 million by Wall Street. However, the continuous decline of Nike's basketball business and gross gross profit margin has aroused concern in the industry.

NIKE's outstanding performance in the past ten years owes much to the lack of substantive competition in the industry.

In other words, NIKE has no real rival.

But now things are changing dramatically.

By Region:

In the second quarter of November 30th, sales in North America increased 3% to $3 billion 650 million over the same period last year.

Sales in the Greater China region rose 12% to $1 billion 60 million compared with the same period last year, excluding the impact of currency changes, and sales increased by 17%.

Sales growth in Japan was strongest, up 16% to $238 million over the same period last year.

The decline in tourist volume caused by geopolitical instability in central and Western Europe was 1% and 7%, or 328 million and 1 billion 385 million, respectively.

It is noteworthy that Nike's basketball business is under pressure from the rival Under Armour and NBA star Steven Curry's signature shoe series, which has a certain impact on the total sales volume of Nike.

In the financial year ended May 2016, basketball accounted for 5.1% of the total sales revenue of Nike, and the Jordan brand of the main basketball business accounted for 10% of the total sales.

In order to cope with the declining demand and increasingly fierce competition in the basketball market, Nike adjusted the design of basketball series products and launched a low price Jordan 31 and Kobe A.D..

。

Basketball is the biggest advantage of Nike, but with the changing concept of consumption among young people, the project is rather awkward for Nike.

Nike, once ruler of the sportswear market, is facing fierce competition in the market environment. It is accelerating the loss of its credibility in the ruling market, and the market share has declined. The strong Nike has become fragile.

However, in the second quarter earnings call conference, Nike brand President Trevor Edwards pointed out that after a series of strategic layout, Nike's basketball business is recovering and is expected to resume growth after May 2017.

The company said that North America as the brand's largest market will maintain its growth trend in the second half of the year by virtue of its high gross profit margin and tight inventory level.

However, the gross profit margin of Nike fell to 44.2% in the quarter due to increased production costs, stronger US dollar and higher retail prices.

In addition,

North American sales promotion and global inventory levels are rising.

Nike gross margin declined for second consecutive quarters. Bloomberg analyst Chen Grazutis pointed out that this would mean that the company would rely more on discount sales to gain sales growth, which is a very bad sign for the company.

However, Mark Parker, chairman and chief executive of Nike, expressed satisfaction with the result. The company expects annual revenue to grow at a high level.

Meanwhile, Mark Parker stressed for the first time that the group felt that

The competitive pressures of Adidas and Under Armour will continue, but he reiterates that the group's revenue target will increase to $50 billion by 2020.

The peak period of Nike has passed. The reason is that according to Cowen Consumer Tracker survey, the 18-34 year old consumer's preference for Nike clothing has dropped from 55% to 44%, while the proportion of Adidas (OTCBB:ADDYY) and Under Armour Inc (NYSE:UA) is gradually increasing, beginning to erode the market of the market.

In addition to efforts to save basketball business, Nike also expects to compete with Adidas in the marathon. As early as the summer of 2014, a project to break through the marathon 2 hour mark was launched, but more than a year ago it began to study the specific marathon shoes solution.

Adidas, the main competitor of the brand, is also making similar attempts. However, Adidas's project has been developed for at least two years. Now it has developed a running shoe shoe. It is also the sponsor of the current marathon world record holder and the Kenya elite Dennis Kimetto.

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