Nike Faces Tough Competition In China
NIKE reported quarterly revenue of $2.16 billion in China for the third fiscal quarter of 2022, down 5% from the same period last year, marking the second decline in China in fiscal year 2022. Nike's shares have fallen 22% so far this year on concerns that supply chain disruptions and slowing sales in China have weighed on the company's prospects.
Analysts point out that NIKE's performance in China declined, the core reason is the rise of the mainland, the current Chinese domestic sports brands gradually dominate the market, under the ebb and fall, NIKE in China's market share has long been lost.
On the same day NIKE announced its earnings, Anta, a Chinese sportswear brand, also disclosed its 2021 annual report. Data show that in 2021, anta Group's operating revenue increased by 38.9% to 49.33 billion yuan, operating profit increased by 20.1% to 10.99 billion yuan; Net profit returned to parent rose 49.6 percent year on year to 7.72 billion yuan.
According to anta statistics, at present anta compare with the two international giants of China wholly owned companies in the same period of income, about equal to adidas China 1.44 times, Nike China 97%.
In addition to Anta, Li Ning, Xtep and other domestic sports brands can not be underestimated.
In 2021, Li Ning's annual revenue and net profit increased by 56.13% and 136.14% respectively. The annual revenue and net profit of Xtep increased 22.53% and 77.05% respectively.
The relevant person in charge of Nike said in an interview “Nike but net profit decline in overall revenue growth, mainly because profit was partially offset by lower margins on full-price products due to higher freight and logistics costs, Combined with the continued investment in digitization, sales and administrative expenses rose 13%, as well as the greater China region falling revenues, the change of the international currency.’’ Nike remains the darling of Wall Street.
Baird analyst Jonathan Komp also previously wrote in a report that the recent surge in COVID-19 cases further reduces the visibility of Nike's sequential sales improvement for the Chinese market. But he is bullish on strong growth outside China.