Another fiscal quarter has passed, and Nike's base camp in North America is still weak. What's more unfavorable is that this company suffered its first quarterly loss in 20 years.
Recently, according to Nike's third-quarter financial report for fiscal year 2018, as of February 28, the Group achieved revenue of US $ 8.984 billion, a year-on-year increase of 7%; but the net loss reached US $ 921 million during the fiscal year Net profit for the same period was $ 1.141 billion. Among them, in the North American market, Nike's third-quarter revenue fell 5.6% to $ 3.571 billion. In China, Nike recorded revenue growth of 24.3% to US $ 1.336 billion in the quarter.
In response to a reporter ’s answer to the loss question, Nike stated that the loss was mainly due to the “new tax reform bill promulgated by the United States on December 22, 2017, which recorded an additional income tax expense of $ 2 billion in the third quarterâ€. The tax rate is as high as 179.5%, compared with 13.8% in the same period in fiscal 2017.
At the same time, Nike's competition with rival Adidas is intensifying, and the war is spreading further online. Adidas CEO Kasper R? Rsted said in an interview with the media that he will gradually reduce stores in the future and bet more online. He had previously stated that the group's growth momentum will stem from continued online sales growth and the huge potential of the Chinese market.
The industry believes that the sportswear industry is facing a transformation, and the two major sports giants will be more fierce in the digital and online contests. In view of the frequent e-commerce actions Adidas has made recently, Nike has to accelerate its pace.
Explosive models are still lagging behind?
In the past three months, Nike Group released the third quarter financial report for fiscal year 2018. As of the third quarter of February 28, Nike Group's revenue increased by 6.5% to 8.984 billion US dollars, mainly due to the growth of the international market and Greater China. promote. However, Nike's net loss for the quarter reached $ 921 million. In a written response to reporters, Nike wrote, "Due to the new tax reform bill issued by the United States on December 22, 2017, Nike recorded an additional income tax expense of $ 2 billion in the third quarter. This part of the expenditure is mainly related to the company Accumulated overseas income is related to transitional taxes that remeasure deferred tax assets and liabilities. "
Among them, in the North American market, Nike's third-quarter revenue fell by 5.6% to $ 3.571 billion, and its market share also declined. In fact, in the second quarter of fiscal year 2018 as of November 30, Nike's performance in the North American market has also shown a downturn. When asked why the North American market continued to show fatigue, Nike did not give a clear answer, but quoted Nike Chairman, President and CEO Mark Parker (Mark Parker) to respond. Expanding the new innovation platform and enhancing the differentiated NIKE consumer experience, the North American market showed a significant positive trend towards the end of the third quarter. "
For the Chinese market that is entrusted with heavy responsibility, Nike said that Greater China's revenue in the third quarter of fiscal 2018 reached US $ 1.336 billion, an increase of 24% year-on-year, achieving double-digit growth for 15 consecutive quarters, but in comparison, Adidas In the fourth quarter, it increased by 31.7%. Although Nike Greater China leads the performance growth within the group, compared with competitors, the advantages may not be obvious. Recently, Adidas also announced a new plan for the Asia-Pacific market, and established Shanghai as the headquarters of the Asia-Pacific market. In fact, in the Chinese market, Nike has also shown a sustained slowdown in growth in multiple quarters last year.
Apparel industry expert Cheng Weixiong told reporters that Nike's predicament in North America and the competition between China and Adidas are at a disadvantage, mainly because the product does not catch the trend of sports and leisure. He pointed out that in the past few years, competitors represented by Adidas have seized the opportunity to capture a large number of consumers with casual and retro products, while the cooperation between fast fashion, luxury brands and sports brands has blurred sports and fashion. The boundaries of Nike have been hit by Nike, which has always been famous for sports professionalism. According to NPD Group data, in the US sports shoes market, relying on Yeezy, NMD, Stan Smith and other explosive sports shoes, Adidas is snatching more market share from Nike. In May 2017, Adidas' market share increased by 5 Percentage points, rose to 11.3%, while the Nike and Jordan brands fell by 1.2 and 3 percentage points, respectively.
"There are many factors that can become an explosion. The two accidental factors of star effect and public event rendering are dominant, but the design intention is the basis of word of mouth. Compared with Adidas, in terms of basketball shoes, Nike ’s design in recent years Personally feel lack of creativity. The other is the problem of reduction of allocation. Refer to the Kobe series of 1-4 generation shoes from 2006 to 2009. At that time, the evaluation was that playing in actual combat is suitable for daily casual wear. In contrast, Kobe retired in 2016 ~ 2018 After the entire AD series, except for the unusually stable price, the upper foot comfort is not as good as before. "Joe, who runs a tide shoe store in Taobao, told reporters.
Footwear expert Wang Yongjun told reporters, "Actually, Nike's lack of explosive models and innovative products has improved. It can be noted that Nike has recently launched a series of new product portfolios, including Nike React, Air VaporMax's extended series VaporMax 2.0 and Utility, as well as the first women's AJ and AF series '1Reimagined', respectively correspond to the categories of running, lifestyle and basketball. "Correspondingly, Nike has accelerated the progress of the innovation platform, such as focusing on development in 2017 The three cushioning technology platforms: ZoomX, Air VaporMax and Nike React; its product development cycle has also been halved, and the Express Lane business that has been launched in North America, Western Europe and China will bear this responsibility. However, online discussions about Nike's lack of innovative products continue.
Game with opponents in China
In the Chinese market, competition pressure from rival Adidas is increasing.
Just recently, Adidas said it would bet more on digital operations. Adidas Group CEO Kasper R? Rsted said in an interview with the media that in the next few years it will gradually reduce stores but will continue to optimize the offline retail experience. At present, Adidas has 2,500 directly operated stores, 13,000 franchised stores and 150,000 wholesale stores worldwide. In this regard, Adidas China told the media that television is still the main and very important media channel of Adidas in China. Sun Jingbo, head of the Chinese Corporate Public Relations Department, said: "The CEO is talking about global strategies, but each market has different characteristics and different ways of implementing the strategy."
Wang Yongjun pointed out, "In the ever-changing pace of e-commerce and the Internet, the sportswear industry is facing a transformation and has to face the severe challenge of saturation of physical stores, and sports brands are no exception. In the Chinese market, it is even more so. Seemingly more complicated. The attempts of sports brand giants in mobile e-commerce are actually facing the same problem, that is, how to re-establish their own voice in the new environment of the Internet, and introduce themselves to the new generation of young customers. Customers will be online in real time for more than half of the day. "In China, Nike and Adidas may compete online more intensely.
With the help of the official website and e-commerce retail channels such as Tmall and JD.com, Adidas' online sales in China have received a good response. According to data provided by Adidas, in the second quarter of 2017, the growth rate of Adidas' sales channels exceeded double-digits, and the growth of e-commerce in Greater China exceeded 100%. Nike, which has not fallen behind in the cooperation with the Chinese e-commerce platform, also tasted the sweetness. Nike, which entered Tmall in 2012, currently has more than 9 million fans in the Nike Tmall flagship store. Nike brand president Trevor Edwards said after the "Double 11" last year that Nike Greater China has maintained double-digit growth for the 10th consecutive quarter. Among them, Tmall's "Double 11" is the key to promoting the growth of the overall direct business.
Zhang Qing, CEO of the Key Sports Consulting Co., Ltd., told reporters, “Nike and Adidas are both trying to do e-commerce earlier in the Chinese market, but the focus is different. High, including the introduction of customized products and analysis of the goods themselves, will also pay more attention to collocation, and Nike hopes that the online media will be more interactive, thereby reducing the distance with consumers and playing a leading role in sales.
In addition, in digital marketing, in December last year, Nike launched the SNKRS e-commerce app in China. Mark Parker said that the app had 2 million downloads in the first month. It is understood that the main function of the app is to provide NikePlus members with shoes for sale Information to strengthen membership retention. In addition, in March of this year, Nike implanted a module of the word Nike React in the WeChat game jump. Nike React refers to a shoe sole material technology launched by Nike last year, using the same name running shoe of this sole in March. It was officially released on the 1st. Nike did not respond publicly to the cost of implantation, but the cost of widespread online distribution is not less than 20 million yuan.
At the same time, Nike, which used to favor sports stars, has been more exposed to traffic stars and small fresh meat in China in recent years. For example, Nike collaborated with Wang Junkai and Zhou Dongyu last year, frequently on Weibo and WeChat Exposed. Joe pointed out, "It's difficult to judge right or wrong with such a strategy, but there is no doubt that Nike used to need attention from traffic stars. That is to say, Nike seems to be in a passive state in today's competition. . "
Zhang Qing believes that in China, consumers in this industry have relatively low consumer demand for professional sports products. Only about 10% to 15% of products are aimed at the professional population. Most people still like to buy trendy products. Sports and leisure styles are prevalent, and Adidas is becoming a beneficiary of consumer taste changes. It is more like "using styles and cross-border stars to more directly please and cater to consumers." Maintain mystery-celebrity or "net red" endorsement-become a topic on social networks-limited sale, this gameplay Adidas seems to be more skilled, before bringing back the 50-year-old tennis shoes Stan Smith back to people When you look at it, you can actually feel it intuitively.
Source: China Business News Author: Wu Yung
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