As of the close of U.S. stocks on June 28 (Tuesday) local time, Nike (NKE.US) fell nearly 7%, and its market value evaporated by US$12 billion in one day, equivalent to approximately 80.5 billion yuan. At the same time, Nike’s stock price fell to $102.48 per share during the session, setting a new low since August 2020.
On the news, on June 27, local time, Nike announced its fourth quarter and full-year financial report for fiscal year 2022 as of May 31 this year, which showed that Nike’s full-year revenue in fiscal year 2022 reached US$46.7 billion, a year-on-year increase of 5%. , excluding the impact of exchange rate changes, a year-on-year increase of 6%. It is worth noting that the performance of Greater China in the fourth fiscal quarter accelerated its decline, achieving revenue of US$1.561 billion, a year-on-year decrease of 19%. Greater China’s full-year revenue was US$7.547 billion, down 9% year-on-year. Excluding the impact of exchange rate changes, it fell 13%.
Losing ground in the Chinese market for three consecutive quarters
The financial report shows that Nike’s revenue in the fourth quarter was US$12.2 billion, a decrease of 1% compared with the same period last year, and an increase of 3% excluding the impact of exchange rate changes. Nike’s inventory increased 23% to $8.4 billion at the end of the quarter due to supply chain disruptions and other issues. For the full year of fiscal 2022, Nike’s revenue reached US$46.7 billion, a year-on-year increase of 5%. Full-year net profit increased 6% year-on-year to US$6 billion.
By brand, sales of the Nike brand in the fourth fiscal quarter fell 1% year-on-year to US$11.657 billion, and full-year revenue increased by 5% to US$44.436 billion. Converse brand revenue in the fourth fiscal quarter and full year also recorded a 1% decline respectively. decline and growth of 6% to $593 million and $2.346 billion. In terms of regions, revenue in Greater China was US$1.56 billion, a year-on-year decrease of 19%, excluding the impact of exchange rate changes, a year-on-year decrease of 20%. Sales in Europe, the Middle East and Africa increased by 9% to US$3.251 billion. The best performance was in other Asia-Pacific markets and Latin America business, which increased by 15% year-on-year to US$1.682 billion. It is worth noting that Nike has lost ground in the Chinese market for three consecutive quarters. In the third fiscal quarter as of February 28, 2022, Nike’s Greater China revenue fell 5.2% year-on-year to US$2.16 billion. In the last fiscal quarter, Nike’s sales revenue in Greater China also fell 20% to US$1.844 billion. In the conference call after the announcement of the latest financial report, the Chinese market has become the focus of investors and analysts. The word “China” was mentioned 26 times in the meeting. According to Nike’s analysis, the decline in performance in Greater China was mainly affected by the increase in inventory, logistics and transportation costs caused by the widespread epidemic. The impact of the epidemic covered more than 60% of the business scope. Tang Ruoxiu, President and CEO of Nike Group, said: “We are optimistic about the Chinese market and its huge future potential in the long term, and this has never wavered. We will continue to increase investment in China and strengthen our digital business capabilities through the China Technology Center. ”
The rise of domestic brands
In fact, not only Nike, but also Adidas, another sports brand giant, was also “setback” in Greater China. Adidas’s previously released quarterly report for 2022 showed that net sales increased by 0.6% to 5.302 billion euros, and net profit attributable to shareholders of listed companies fell by 13.6% to 482 million euros. In this quarter, Adidas’ sales in Greater China fell by 35% year-on-year, showing a “big decline”, thus dragging down the overall performance. From the second quarter to the fourth quarter of fiscal year 2021, Adidas Greater China sales were 1.003 billion euros, 1.155 billion euros, and 1.037 billion euros respectively, down 15.9%, 14.6%, and 24.3% year-on-year. On the other hand, the performance of domestic brands such as Anta and Li Ning has been rising steadily. Anta’s financial report shows that in the first quarter of 2022, the retail sales of Anta brand products recorded a positive growth of 10%-20% compared with the same period last year. Li Ning’s growth rate is even more rapid. Its operating data shows that as of March 31, 2022, the retail sales of Li Ning points of sale (excluding Li Ning YOUNG) on the entire platform have recorded a high growth rate of 20%-30% year-on-year. Not only in terms of performance, but also in terms of market share, Euromonitor Information Consulting data shows that in 2021, the market share of Nike and Adidas in China fell to 40% (Nike 25.2%, Adidas 14.8%), breaking the 2018 to 2020 The pattern maintained at 43% year-on-year. Anta Group increased to 16.2%, surpassing Adidas for the first time and rising to second place. Fourth-place Li Ning’s market share also rose to 8.2%.
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