The Chinese market has become the ballast stone of Nike's performance.
Nike recently released a quarterly report for the fiscal year 2024 (June 2023 - August 2023), the current period, Nike revenue of $12.94 billion, adjusted for exchange rate growth of 2%. NIKE brand revenue was $12.4 billion, up 3 percent on a currency-adjusted basis, driven primarily by growth in Europe, the Middle East and Africa, Greater China, Asia Pacific and Latin America, partially offset by declines in North America. Converse generated revenue of $588 million, down 9% year-over-year on a currency-adjusted basis due to a decline in North America, partially offset by growth in Asia.
From the profit point of view, in the current period, Nike returned to the mother net profit of $1.450 billion, down 1.2%. Gross margin was 44.2%, down 0.1pct year-over-year, primarily due to higher product costs and adverse changes in net foreign currency exchange rates, but largely offset by strategic pricing actions.
Growth in China bolstered Nike's overall revenue. Data Source: Corporate Earnings
The ebb and flow
Specifically, affected by a variety of factors such as inflation, Nike's North American market is under pressure.
In the first fiscal quarter, Nike's North American market achieved revenue of $5.423 billion, down 1% year on year after exchange rate adjustment, mainly due to the tightening of shipment revenue in the context of wholesale channels in the clearance of inventory.
Other markets look better, particularly Greater China.
In the current period, Nike's Greater China revenue of $1.735 billion, an increase of 12% on a currency-adjusted basis. According to the earnings call, the revenue of offline direct sales and e-commerce channels in Greater China increased by 12% and 6% respectively.
In addition, in the first fiscal quarter, Nike in Europe, the Middle East and Africa market revenue of $3.61 billion, adjusted for currency growth of 6%; Asia Pacific and Latin America (excluding Greater China) generated revenue of $1.572 billion, up 3% on a currency-adjusted basis.
In the current period, Nike footwear revenue was 8.421 billion US dollars, an increase of 4% after exchange rate adjustment; Apparel revenue of $3.388 billion, down 1% on a currency-adjusted basis. Accessories revenue of $531 million increased 9% year-over-year on a currency-adjusted basis.
By channel, in the first fiscal quarter, Nike's direct channel revenue of $5.4 billion, an increase of 6% after exchange rate adjustment, of which e-commerce channel revenue increased by 2% after exchange rate adjustment; The wholesale channel generated revenue of $7 billion, up 1% year-over-year on a currency-adjusted basis.
It is worth noting that from the perspective of EBIT, the North American market is still the profit center of Nike. The region's EBIT for the period reached $1.434 billion, up 4% from the same period last year. Greater China EBIT of $525 million, down 4% year on year, which may be related to the higher discount rate during the "618" period. Ebit in the rest of the region is in the declining range.
From the inventory point of view, Nike pressure has been relieved. In the first quarter, its ending inventory value was $8.7 billion, down 10% year-over-year, mainly due to a double-digit decline in inventory, but partially offset by higher product mix and product input costs, and inventory turnover days were 114 days, down 2 days from the same period last year.
"Strengthen investment"
Back in China, Nike is upping the ante.
Previously, Dong Wei, vice president of Nike Group and general manager of Greater China, told the 21st Century Business Herald that the Chinese market for Nike is not only a huge production base and export base, but also the forefront of Nike's global innovation and research and development, and one of the most important markets for Nike. "We will strengthen our investment in China even more." "She said.
From the operational point of view, Nike is also leaning to the Chinese market. For example, in the field of basketball, the Kobe series of products returned, Nike also released the Kobe 8 Protro version for the first time. As a marketing activity, in July, Nike signature shoes basketball player and Milwaukee Bucks forward Giannis Antetokounmpo opened the first Nike basketball China tour, and debuted his new signature combat boots Nike Zoom Freak 5 and the synchronous launch of children's shoes series in Greater China. In the running shoe market, Nike launched a new Nike InfinityRN 4 this quarter.
From the channel side, Nike said that in this year's Tmall "618 shopping festival", the total turnover achieved double-digit growth, the number of new members more than two million. In the same period, the number of live views of Nike's official flagship store on Tmall increased by more than 100% over the same period last year.
In addition, Nike continues to promote the "connected member solution" of its partner stores, and has achieved a consistent Nike member service and experience for consumers in 350 stores in 102 cities across the country.
Dong Wei also said that the female market will become Nike's incremental market. In the past two years, Nike has significantly restructured the business while making its largest investment.
Nike sports equipment for 13 women's national teams, including the Chinese women's football team. Nike has also created the brand's most complete collection of fan apparel ever - not only for women, but also for men and children.
Overall, Nike for the operation of the Chinese market, obviously more concerned.
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