Nike's net profit increased 38% in the first quarter of the new fiscal year

On September 26, sportswear giant Nike also announced the first quarter of the new fiscal year. Nike’s net profit in the first quarter of the new fiscal year increased by 38% year-on-year, operating income increased by 8% year-on-year, but the company’s revenue in the Chinese market fell by 3%.

In the view of the industry, Nike's current difficult problem is the short-term growth bottleneck encountered in the Chinese market. For this reason, Nike is also actively making strategic adjustments.

Growth bottleneck in the Chinese market In the first quarter of the new fiscal year ending August 31, Nike’s net profit increased to 780 million U.S. dollars, up 38% from 567 million U.S. dollars in the same period of last year. Nike said that the company’s operating income for the quarter was US$6.97 billion, a year-on-year increase of 8%.

"Daily Economic News" reporter noted that even though Nike achieved an increase in operating income in the first quarter of the new fiscal year, its performance in China has declined. According to Nike’s latest financial report, the company’s operating income in the Chinese market was US$574 million, a decrease of 3% year-on-year.

In fact, Nike announced in July the performance of the fourth quarter of the previous fiscal year that the company’s sales in the Chinese market may decline during the first half of the new fiscal year.

It is reported that Nike is trying to deal with the economic downturn in Europe and the slowdown in China's growth. The company said it is trying to reduce its inventory in China and redesign new products to suit the taste changes of Chinese customers.

In the eyes of some people in the industry, Nike's current thorny issue is that it has encountered short-term growth bottlenecks in China.

High-end products have more advantages At the same time, Adidas also lowered its performance indicators for the entire fiscal year again this month. According to the British "Financial Times" report, Adidas lowered its annual net profit forecast by nearly 10%, currently estimated at 820 million to 850 million euros.

Last month, Adidas announced its 2013 interim report that shows that in the first half of the year, the company’s global net sales fell by 3% year-on-year. At the same time, the driving force of the Chinese market is also slowing down. Calculated according to the constant exchange rate, the company's sales revenue in Greater China increased by 6% in the first half of the year, far below the 19% in the same period of last year.

In this regard, China Investment Advisor light industry researcher Zhu Qingzhao pointed out that adidas's performance growth was inferior to Nike, mainly due to Adidas' loss in the Russian market, the Russian market as Adidas's third largest market, is a major weapon against Nike, while The global downturn in the golf market has also had a significant impact on Adidas.

Zhang Qing, the founder of Key Road Sports Consulting Co., Ltd., told the Daily Economic News reporter that Nike has been growing positively on a global basis and is very active in using new media digital marketing. Relatively speaking, Adidas invested resources in related fields such as the NBA and the resulting revenue was not ideal. "In the European market, Nike's impact on Adi is also relatively large."

For Nike in the Chinese market than Adidas first entered the "weak" period, some industry sources believe that this is mainly because the two have different strategies.

An analyst who declined to be named told reporters that he was more optimistic about Nike's future development than Adidas. He pointed out that although Nike currently does not have many substantive measures in channel development, it is also actively adjusting, such as the establishment of a separate category of specialty stores, whether the future will be worth the wait.

Zhu Qingyi also pointed out that compared with Adidas, Nike's performance in the Chinese market may become stronger in the future. Adidas wins with mid-range products, while Nike has more advantages in high-end products. With the continuous development of the Chinese economy, the level of per capita income has gradually increased, and Nike’s demand may rebound strongly.

Zhang Qingzhi said that the development of the brand is determined by many factors. It is now a forward-looking era of competition and patience for the future. It is the same for domestic brands, because the change in domestic consumer trends is too fast.