On December 21, Nike announced its second quarter results for fiscal year 2022. Q2 revenue was US$11.36 billion, a year-on-year increase of 1%, slightly exceeding market expectations of US$11.25 billion; at the same time, for the 2022 fiscal year ending on November 30, 2021 In the first half of the year, total revenue was US$23.605 billion, a year-on-year increase of 8%.
Overall, Nike’s performance in the global market is relatively impressive. However, by region, Greater China, Asia Pacific and Latin America experienced a significant decline in the second quarter of the financial reporting period, especially in Greater China.
The financial report shows that in the second quarter of fiscal 2022, revenue in Greater China was US$1.844 billion, a year-on-year decrease of 20%; a slight decrease of 6.96% from US$1.982 billion in the first quarter of fiscal 2022; and in the first half of fiscal 2022 Look, the overall half-year revenue in Greater China also dropped 6% year-on-year.
In other regions, revenue in Asia Pacific and Latin America was US$1.347 billion, a year-on-year decrease of 8%; North America revenue was US$4.477 billion, a year-on-year increase of 12%; Europe, the Middle East and Africa revenue was US$3.142 billion, a year-on-year increase of 6% .
According to the financial report and the explanation of the conference call for the second quarter of fiscal 2022, the decline in Greater China was mainly due to the impact of the epidemic, factory closures, reduced available inventory, and supply chain disruptions. In particular, the closure of the Vietnam factory directly caused Nike to cancel the production of approximately 130 million units of equipment.
However, supply chain issues have been highlighted in the first quarter of Nike’s fiscal year 2022. At that time, it also stated that the closure of factories due to the epidemic had a negative impact on the flow of products to stores, fulfillment centers and wholesale partners. And as a result, Nike adjusted its financial forecast for the second half of the year to single-digit growth.
For Nike, the supply chain is the most important and urgent problem to solve in this fiscal year. At present, China will still be the center of the global supply chain. Although the supply chains of some clothing brands have begun to move to countries such as Vietnam in recent years, they still face the impact of policies, regulations, and epidemics.
At the same time, 2021 is also the 40th year that Nike has entered the Chinese market. After 40 years of continuous deepening, Nike continues to be bound to Chinese consumers in terms of channels and products.
It is reported that in terms of products, commemorative edition shoes and clothing series will be launched for Chinese consumers in 2021. In terms of channels, it also further expanded offline stores and e-commerce channels: during the Tmall Double 11 event (0:00 on November 1 to 24:00 on the 11th), it won the first place among sports and outdoor brands on the Tmall platform; offline also It continues to expand stores steadily. According to big data from Yingshang.com, so far, Nike has entered 1,447 shopping malls and 518 department stores.
Nowadays, after the rapid development of China’s sports shoes and apparel market in recent years, domestic sports shoes and apparel brands such as Anta and Li Ning have emerged, and the market competition has become more fierce. In particular, Anta has achieved a cumulative turnover of 4.65 billion yuan in e-commerce during this year’s Double 11. The ultra-high performance surpassed Nike’s top position in the Chinese market.
Regarding the future of the Chinese market, Nike remains optimistic and optimistic in the long term and expects the current situation to improve starting from the third quarter of fiscal year 22. However, as Chinese consumers’ preference for local domestic brands further increases and the trend of new domestic products deepens, if Nike fails to solve the supply chain problem, its performance in the Chinese market may be difficult to return to its original level in the short term.
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