On the sports arena, athletes compete fiercely, while off the field, sales competition among major sports brands is equally intense.
The latest performance released by global sports equipment giant Nike recently showed a double decline in profitability, but in fact, the company's performance has been declining for some time, and weak sales have also dragged down its performance in the capital market. Since the beginning of this year, Nike's stock price has fallen by about 30%.
Nike is going through its dark times. Analysts believe that in the past few years, Nike has overly emphasized its direct sales strategy and to some extent neglected product innovation, leading to other competitors quickly occupying the market and causing Nike to lose market share.
On the other hand, the market share lost by this giant has been rapidly seized by its old rivals Adidas, Arthurs, as well as emerging brands such as On Run and HOKA ONE ONE ONE in recent years. Consumers are not avoiding buying sports shoes and clothing, but have more diversified choices.
Nike loses color, performance under pressure
Nike has been under pressure on its performance since the beginning of this year. The latest Q1 2025 financial report released in October showed that Nike Group achieved revenue of $11.6 billion, a year-on-year decrease of 10%; The net profit was 1.1 billion US dollars, a year-on-year decrease of 28%. As Nike's second-largest market globally, revenue in Greater China also experienced a 3% year-on-year decline.
Nike's shock has been going on for some time. In June of this year, Nike released its financial results for the fourth quarter and full year of the 2024 fiscal year ending on May 31, 2024. The group achieved a revenue of 12.606 billion US dollars in the fourth quarter, which was lower than the market expectation of 12.86 billion US dollars, according to analysts. In the fiscal year 2024, Nike Group achieved a revenue of 51.362 billion US dollars, a year-on-year increase of 1% on a constant exchange rate basis; Achieve a net profit of 5.7 billion US dollars, a year-on-year increase of 12%. It can be said that the revenue is basically the same as last year, but the growth has stagnated.
At the same time as releasing its performance, Nike lowered its annual performance guidance. This also caused its stock price to plummet by over 12% on that day.
Nike has been undergoing strategic changes since last year. In December 2023, Nike announced plans to reduce costs by approximately $2 billion over the next three years. In February of this year, Nike Group announced a 2% layoff to streamline its personnel structure and reduce operating costs. In April of this year, Nike announced another round of layoffs, planning to lay off approximately 740 employees at its global headquarters.
Stifel analyst Jim Duffy expressed concerns about Nike's future growth prospects in his analysis report: "The performance guidance for fiscal year 2025 will delay the growth turning point to 2025, which requires investors to be optimistic about the success of new models that have not yet been confirmed, as well as to see the uncertain background of the non essential consumer goods market in the second half of 2024, until the momentum strengthens again in the second half of 2025. The credibility of the management has been seriously challenged, and the possibility of executive turnover adds more uncertainty to the company's future development
Competitors share the food market
Industry analysts believe that the classic series has long dominated Nike's product line, causing consumers to feel tired and turning to other brands that can provide innovative designs and ideas.
Compared to Nike's decline, its original competitors seem to have ushered in a moment of glory.
For example, Adidas. After undergoing a change in leadership, Adidas has returned to its growth track. On October 29th, the third quarter report released showed that Adidas' global revenue was 6.438 billion euros, an increase of 10% compared to the same period last year. If the impact of Yeezy is excluded, it will increase by 14% year-on-year; The operating profit reached 598 million euros, an increase of 46.0% compared to the same period last year. Based on better than expected performance in the third quarter and strong brand development momentum, Adidas has raised its full year performance guidance and expects a revenue growth rate of 10% in 2024 (previously estimated to be in high single digits), with operating profit reaching around 1.2 billion euros (previously estimated to be around 1 billion euros).
For us, the growth in the third quarter was very strong, once again better than expected. It is particularly worth mentioning that Adidas achieved growth in all markets, channels, and categories in the third quarter. The double-digit growth in sports fashion and sports performance also indicates that our business is currently in a good 'balance' state. In the past two quarters, the continued growth of the Adidas brand in Greater China and the earlier than expected return to growth in North America have strengthened our confidence in the medium to long term prospects. "Last year's newly appointed head, Adidas Global CEO Gulden, said," As the popularity of the Adidas brand continues to increase, we hope to continue to work with the new generation of consumers in all markets through the two business segments of sports fashion and sports performance. Establish a link. We will continue to maintain this momentum and lay a solid foundation for future growth
On October 25th, another American sports brand, Skechers, released its Q3 2024 financial report, which showed that during the reporting period, Skechers' sales reached $2.348 billion, a year-on-year increase of 15.9%; The gross profit was 1.223 billion US dollars, up 14.1% year-on-year; Net profit increased by 32.9% year-on-year to $193 million.
In addition, although the scale of newly emerging brands has not yet been able to compete with traditional big brands such as Nike and Adidas, their development momentum should not be underestimated. HOKA ONE ONE, founded in 2009, was acquired by Deckers Brands in 2013. The parent company recently announced that its Q2 performance exceeded expectations and raised its annual sales forecast due to strong demand. The company's second quarter profit increased by 35% year-on-year to $240 million, and sales increased by 20% year-on-year to $1.31 billion, exceeding expectations by $1.2 billion. Dex reported that Hoka's sales increased by nearly 35% in the second quarter.