On December 22, Nike released its financial performance report for the second quarter of the 2024 fiscal year, achieving a revenue of $13.4 billion, a year-on-year increase of 1%. Nike's self operated business revenue was 5.7 billion US dollars, a year-on-year increase of 6%; Nike's digital business revenue increased by 4% year-on-year. Meanwhile, the gross profit margin increased by 170 basis points to 44.6%, and inventory decreased by 14%.
"The second quarter performance demonstrates how the company can steadily develop in key areas of innovation and growth," said Tang Ruoxiu, President and CEO of Nike Group. The company focuses on the winning secret of innovative products, unique brand stories, and differentiated market experiences.
Revenue in Greater China reached $1.863 billion
Nike's performance in the Greater China region is outstanding, with revenue achieving five consecutive quarters of growth. The financial report shows that during the reporting period, Nike's revenue in Greater China reached $1.863 billion, a year-on-year increase of 8% on the basis of unchanged exchange rates.
Regarding Nike's performance in the Chinese market, textile and clothing management expert and General Manager of Shanghai Liangqi Brand Management Co., Ltd. Cheng Weixiong told Securities Daily that Nike's performance is relatively stable. This quarter, Nike has further increased its online business in China and also increased its research and development efforts in response to the demand of the Chinese market. This indicates that Nike continues to have a positive outlook on the Chinese market.
Pan Jun, Global Commodity Strategy Advisor Director of Bain Company, told Securities Daily that Nike's series of measures such as strengthening its digital layout, actively embracing young consumers, and valuing the female market have achieved excellent performance in the Chinese market. With the upgrading of consumption in the Chinese market and the increasing pursuit of fashion and sports products by young consumers, Nike is expected to continue to maintain a high growth momentum in the future.
Nike stated that during the Double Eleven holiday this year, it continued to maintain a strong momentum, winning the top spot on the Tmall Sports Brand Sales List for nine consecutive years and the top spot on the other seven lists; With the further upgrade of the Nike Membership Promotion Program, the emotional bond between the brand and consumers has been further strengthened. Compared with the same period last year, the average consumption per member has increased by over 30%.
"Nike's online sales have become an important part of driving performance. In its development, Nike actively embraces young people and shapes their sense of brand identity through cooperation with celebrities and trendy cultures. At the same time, Nike has strengthened the construction of social media and online communities, maintained close interaction with young people, and established a strong fan base." Zhang Xinyuan, Secretary General of Co Foundation Think Tank, told Securities Daily The reporter said.
In addition to excellent online performance, Nike's offline store sales in Greater China achieved double-digit growth year-on-year in the second quarter as consumers returned to offline, strongly driving Nike's sustained growth in the Chinese market.
Comprehensive insight into consumer needs
Behind Nike's counter trend growth in performance in Greater China is its deep cultivation in the Chinese market. It is understood that in the second quarter of this year, Nike has formed close ties with Chinese consumers while continuously creating exclusive sports moments to connect with local consumers.
In the running market, as one of the major events of this year's running circle, Nike invited top marathon athlete Erud Kipchaug to embark on a trip to China in October, visiting the gathering places of runners in Beijing and Shanghai, interacting closely with elite coaches, folk running groups, and more young runners, injecting new vitality into Chinese running culture.
In November, the Shanghai Marathon returned after three years, with Nike accompanying for the 12th consecutive year, calling on more runners to participate in urban marathon races and running sports. Tens of thousands of "mounted" runners fired their guns at Taurus Plaza, the Bund, and Nike again provided high-quality professional services and products for each participant.
In addition, Nike will also explore sports promotion to the next generation, and the 2023 Nike Children's Run will first start in Shanghai in early September. More than 4000 parents and children participated in it.
Nike has also been a leader in the basketball market. In the second quarter, Nike further highlighted the brand's differentiated competitive advantage and leadership position in the basketball field through continuously increasing innovative products and diverse consumer experiences.
In October, the "Only Basketball" event made its debut in Taikoo Village, Sanlitun, Beijing for two consecutive days, with over 200000 basketball enthusiasts participating in online and offline interactions, showcasing the unlimited influence of Nike basketball. On the product level, at the Shanghai CIIE in November, the innovative basketball product NikeG T. Cut3 made its debut in Greater China and as the first basketball shoe to feature ZoomX midsole foam, it received positive feedback from the market and consumers.
Continuously strengthening local innovation
During the reporting period, Nike continued to fulfill its commitment of "in China, for China", and provided products and services more suitable for local needs for the Chinese market and consumers by further strengthening its local innovation ability.
It is understood that at this year's CIIE, Nike announced that it will build a Nike Sports Research Laboratory at its Greater China headquarters in Shanghai in 2024, focusing on the unique needs and potential opportunities of Chinese consumers, and using sports technology and local insights to customize innovative products and services for local consumers, further strengthening its connection with Chinese consumers.
At the same time, Nike not only focuses on product performance, but also listens to the voices of local consumers, helping them release their personality and express themselves through product design and ingenuity. In October, Nike held a Culture of Apparel event, combining the diverse needs of local consumers for innovative clothing functions and showcasing individuality, showcasing the potential of Nike's new season of clothing products in terms of styling and style display. The event showcased Nike's warm winter equipment made for winter, Nike's exclusive street dance series inspired by the new generation of dancers, and the NikexFengChenWang series products launched in collaboration with Chinese female designer Wang Fengchen, Meet the personalized needs of consumers from multiple circles, and through continuous innovation, gain their attention and recognition.
The Local Product Fast Track (GEL) is also an important way for Nike to further transform its insights from the Chinese market into innovative products and services. "In the second quarter, Nike also achieved a rapid response to the local market demand through the local product fast track, and launched innovative products including the latest hip-hop series, with a warm market response. The continuous strengthening of the ability of the local innovation team will further enhance Nike's growth momentum in the Chinese market." Nike said.