Can Nike Pull Amazon Out Of Its Performance Haze?

According to the world clothing shoes and hats net, in mid June,

Suddenly announced that the global layoffs of more than 1000 people, the company's stock fell 3.22%.

For this big move, the explanation given by Nike is to deal with the reality of slowing sales.

People can not help but sweat for their upcoming earnings report.

However, in June 30th, the answer to the fourth quarter earnings of Nike was announced, but it was completely without imagination.

The results of the fourth quarter of fiscal year 31 as of May 2017 showed that Nike's revenue grew 5% to 8 billion 700 million US dollars in the fourth quarter, while the total revenue of the 2017 quarter was 34 billion 400 million dollars, up 6% over the same period.

The fourth quarter revenue growth was mainly concentrated in Western Europe (11%), China (17%), and Middle East Africa.

(14%) excluding the effect of exchange rate, the revenue growth of these markets reached double digit percentage.

At the same time, the company also announced that it will confirm its presence in Amazon.com and will share its sales through pictures sharing social media Instagram.

On the same day, the company's share price jumped 10.96% to $59.71.

About earnings: discount is not a permanent solution. The North American market has yet to turn the tables. Of course, the earnings report is not all good news.

There are two noteworthy data: one is gross margin.

Although in the fourth quarter, Nike group achieved a net profit of US $1 billion 8 million, a 19.1% increase over the same period last year. However, the gross profit margin of the Nike group fell to 45.9% from 44.1% in the same period last year, a drop of 180 basis points.

The biggest reason is that gross profit margin has not risen or fallen, but the most direct reason is that in the past time, the company still relies mainly on discounts to support the market.

Since last year, Nike's global orders have been slowing down, which means retailers' inventory is piling up.

Discount is obviously the most direct and effective way to clean up inventory.

In the current quarter, Nike's earnings report should also prove this: in the past few years, the company has offered more discounts to stimulate sales growth.

The two is the performance of the North American market.

In emerging markets such as Western Europe, China and the Middle East and Africa, Nike group created double-digit revenue growth in the fourth quarter, but in its main position in the North American market, revenue growth recorded only 3% growth, and the proportion of the total sales in the North American market in the global 43%-45% situation had to be expressed.

Nike is an important threat to the North American market at this stage.

Data show that the share of the former in the American sports shoes market has increased from 6.3% in May last year to 11.3% in May 2017, while Nike decreased from 35.9% last year to 34.7%.

In addition to the pressure from competitors, Nike's poor performance in the US market is also related to the overall decline of the US retail industry.

In the case of less popular stores, more and more consumers choose online purchases, which is undoubtedly a huge blow to Nike, which relies heavily on physical retail channels.

As for Adidas's aggressive and weak North American market, Mark Parker, chief executive of Nike group, has not avoided it. He is frank about Nike's deep urgency, and he also assured investors that the North American market is expected to resume profitability in the second half of fiscal 2018 after the launch of the new product.

In addition, it should be noted that when the Nike group's revenue growth was 5%, the converse brand increased from 513 million in the fourth quarter of last year to 554 million US dollars this year, or 8%, exceeding the group growth rate.

A lot of articles have been analyzed before. Nowadays, the sports brand of "Sports" is rather popular. Just like puma, converse is the leisure brand of Nike group. Its performance also illustrates this point.

With Amazon's hand, will it take away the haze of Nike? For cooperation with Amazon, there is an article commenting on the "hopelessness of despair" by the Nike, after all, Nike insisted on maintaining a distance from the Amazon.com.

However, in the case that countless luxury goods have begun to embrace the platform of electronic commerce, it is better to say that it is "going with the flow". At least Wall Street is very optimistic about this, which is certainly not groundless.

According to fashion headlines, in the past year, the retail sales of Nike brands rose by 16% to 9 billion 82 million US dollars compared to the same period last year, while wholesale channel sales increased by 2% to 23 billion 80 million US dollars over the same period, accounting for 72% of the total Nike brand revenue.

And entering Amazon will help Nike get more direct contact with consumers.

In fact, in other markets, Nike has chosen to cooperate with the local e-commerce platform. For example, China chose to enter Tmall mall in Alibaba. In Europe, it chose Germany's largest e-commerce platform Zalando, plus brand self run official website. Nike's total e-commerce sales reached $2 billion.

For its cooperation with Amazon.com Inc., analysts believe that it can directly increase the sales revenue of the US market by 3-5 billion dollars per year.

Mark Parker said in a conference call: "over the years, we have consistently implemented a sales strategy to provide consumers with the market they really need.

Therefore, we have been very careful in subdividing and distinguishing our partners to ensure that they have the right product classification to provide the best service for consumers.

In the partnership with Amazon, we will continue to implement this.

This is a very small experiment, and this is just the beginning.

If the cooperation with Amazon is progressing well, we will continue to consider how to expand it.

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