Unexpected Quarterly Report Ending Nike Revenue Grew 6%

The sports giant's 2016 ended in a quarterly report which was unexpected to Wall Street.

According to the world clothing and shoe net, in the 3 months ended November 30, 2016,

Revenue grew by 6% to $8 billion 180 million a year, higher than Wall Street expected.

Unexpectedly, Nike has experienced 12 consecutive months of decline and more than 30% of its share price. In the most important North American market, the demand for the company's futures orders has slowed for four consecutive quarters.

2016 Nike stock price trend

Futures Orders refers to the total volume of goods that Nike will wholesale to dealers in the next quarter. It is the most important data used by investors to determine how much money they can make in the future since Nike went public in 1980.

In November, Nike's stock went through an unprecedented "decline", and a number of financial institutions lowered Nike's stock rating to "sell off".

Compared with the 40.47% rise in share price and the breaking of 100 billion mark in 2015, Nike's 2016 didn't fare well.

"Annual income of 32 billion 300 million dollars, ratio

,

Lululemon adds more revenue every year, but Nike seems to be a little too comfortable. "

Columnist Shelly Banjo commented in an article.

At the end of the year, the quarterly reports redeemed some of the declining trends. Nike's CEO Mark Parker happily announced at the earnings conference: "we are creating a new process, which we call" fast lane ", which allows us to shorten from production to market cycle from month to week.

Trevor Edwards, Nike's brand executive, also praised this. He cited 3 recent sales of strong Retro Running Shoes: Presto MidUtility, the Flyknit Racer and Lunar Charge. "We only used 1/4 time to put them into the market.

Thank you for speeding up the ability to create sneakers.

LunarCharge

There is another landmark change in the year-end quarterly report: Nike decided not to publish Futures Orders data again.

In view of the fact that the proportion of direct business (DTC) has exceeded 25%, Nike believes that futures orders no longer can "predict the future", in other words, Nike's past sales methods have failed.

In fact, the "future plan" -- when Nike called them an innovative way of cooperation with retailers -- is the key innovation for Nike to break through the bottleneck of annual growth when faced with supply and demand problems in 1973.

That autumn, Phil Nate, the founder of Nike, had an idea: find our largest retailer to sign a fixed agreement and offer a maximum 7% discount to our large and non refundable orders 6 months ahead of schedule.

In his autobiography, he wrote, "I told them that the future plan concerns us and the future of each of them, so they had better join us, the sooner the better."

But the bottleneck, or the ceiling has come.

The most direct appearance came from a bankruptcy in sports retailing this year: Sport Aurthrioty, an American sporting goods store with 463 stores, is losing a lot of customers because its business model can not keep up with the diversified sporting goods market.

And this is not an example.

"Nowadays, all sports brands are starting to sell themselves on the official website, and our customers have better whereabouts, and our value is decreasing every day."

BrianShelton, a sports goods company owner, said in an interview.

At the end of 2015, Nike announced that it would boost its DTC business, including direct outlets and official website, to 33% of the company's total revenue in 2020.

Obviously, the "fast lane" is no longer a model for slow retailer. It is more suitable for Nike's five storey flagship store in SoHo District of New York in November this year. Its unique shelf display and latest fashion are the consumers' concerns today.

Nike SoHo flagship store displays a limited sale of "back to the future 2" automatic shoe lacing system NikeMag

And the benefits of the year: longer delivery time, fewer pportation, early lock sales, bank cash balances, and company stability.

Putting it into the 2016 sports market seems to be a disadvantage.

The pace here is much faster than it was 40 years ago.

The influence of fashion makes it easy for the sports companies that stare at athletes, sweats and runways in the past.

The trend has stimulated people's consumption. It is known as the "Athlesiure" method to make sports shoes and sportswear become a daily wear. This really brings about the growth of sports brand in recent two years, and also makes the competition more intense.

Huaihailu Road's "sports brand Street" in Shanghai is the epitome of this trend.

This road, which is dominated by luxury and Swiss watches, is now being occupied by fast fashion and sports brands.

Nike, who carries H&M and UNIQLO shopping bags to pick up a pair of sneakers in Nike flagship store, needs to deal with more in terms of geography and market.

In the past year, Huaihailu Road has opened at least 3 stores for Nike competitors: PUMA and ASICS (Arthur) flagship store, and adidasyoung children's wear shop, opened in February, May and September respectively.

By December, Nike's flagship store next to Nike had just been renovated. Cao Jun and her boyfriend were sitting on the first floor. The latter was struggling to buy a new basketball shoe of $1499 by James Harden.

"He thought it was a little expensive," but when asked about a limited amount of NMD on his feet, Cao Jun's boyfriend said it was 2999 yuan plus.

Shanghai Huaihailu Road "sports brand Street", Adidas "awakening awakening" and Nike "subversion" outdoor advertising.

In 2016, Adidas is the most catching sport in sports, and the secret is still fast.

Under the guidance of the one or two Yeezy (NMD), sneakers and fashion people are eyeing the new style released by Addie every week. Once they get on the shelves, they will be swept away.

Lester Wasserman, the boss of West NYC, a famous shoe store in New York, commented, "Adidas, like clockwork, their speed in the market will be the biggest challenge for their competitors.

Even if competitors are playing better tricks 30 days ago, Adidas's new product will not enter the market for more than a few months.

And Nike is trying to get close to consumers by strengthening the control of the retail side.

Throughout 2016, such attempts included opening a giant integrated flagship store in the central area of the core city, providing the best personalized service, creating a seamless connection between digital and physical store platforms; increasing the number of Jordan specialized shops and Nike Lab worldwide, relying on these shops to display their taste in Hongkong, Tokyo, Paris and other places, while Nike and other large chain retailers like Foot Locker and Beijing Zhongguancun Europe and the United States further strengthened cooperation and set up "shop store" to enhance the brand's display image.

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Chengdu's newly opened Jordan flagship store, panda on top of IFS, is dressed in a flying suit.

Nike's direct business increased by 23% over the past quarter, but the profit driven driven by this data has, in some people's eyes, "damaged independent retailers." in the interview with Footwear News, BrianNadav, founder and creative director of Lapstone&Hammer, the trend shop in Philadelphia, said, "however, in today's sports lifestyle, it is possible for retailers to survive without Nike. If you have (sell) Adidas, it was impossible to do one or two years ago."

Independent retailers around the world, especially those who specialize in shoe resale business, feel the shift of profit points in the market.

"As before, it's basically a pair of Jordan shoes. You can't see the phenomenon below the original price."

Zhu Ziyan, the owner of the dolphin sports at Taobao shoe store, said that he felt that Nike had made a lot of strange colors, "on the one hand, the enthusiasm for AJ went down."

As for basketball, there is a big background that the pattern of sports market itself is changing. Running fitness becomes more mainstream than basketball, and many fans do not play basketball very often.

At the same time, the television media growing up with NBA is declining. This year's Rio Olympic Games is a sign.

Forty years ago, the top three of the US Olympic trials were all dressed in Nike, which may also become a bargaining chip in the market. But now, the young people are more concerned about not what they wear on the track and field gold medals, but the new outflow of Kanye West on Facebook. Most of the gold medalists may not be as influential as a angelababy or Ning Zetao.

In January 1, 2017, Ning Zetao sent micro-blog to become the latest spokesman for Adidas Greater China.

Nike has not lost control of the social network, but they only work with athletes to create a sports community to pmit data with the "global mileage of 2 billion 500 million miles running through Nike+".

Nike and Apple launched the Apple Watch Nike+ special edition.

At the December 20th earnings conference, Nike's brand President Trevor Edwards promised that Nike's basketball business would resume growth after May 2017. They redesigned the products of the basketball series and launched "better looking, cost-effective" shoes, such as Kyrie2, Le Bron Soldier10, Jordan31, KobeA.D. and so on.

But the other result is that Nike's gross profit margin has dropped to 44.2% in 2 consecutive quarters. Peng Bo analyst Chen Grazutis pointed out that this means that the company will rely more on discounts to promote sales growth. In other words, Nike's shoes are not expensive in the competitive environment.

In the past 3 years, Nike's strong financial performance has been largely attributed to the high margin products, which are the Flyknit series and Jordan and Kobe star shoes introduced since 2012.

But now Flyknit flying line technology has 4 years of life, knitted fabric technology is no longer exclusive.

Adidas has Primeknit vamp, and NewBalance is the new 580 series, which has been applied to many sportswear manufacturers.

Flyknit fly line technology

Nike used the Unlimited Colorway series for the 2016 Summer Olympic Games, and almost all the 60 running shoes, basketball shoes and football shoes were Flyknit technology.

MattPowell, a vice president and sports industry analyst at NPD Groups, a market research firm, believes that the lack of innovation in sports brands is a misunderstanding because we are currently in a strange cycle where consumers do not regard technology as fashion.

The trend of "technology is fashion" has ended in 2013. The most important thing is that consumers are not brands deciding what fashion is, but even with cutting-edge technology, customers are not buying it.

But if you look at the most successful technological innovations in sports circles, you will find that they can often exert a natural influence on fashion. Air Max air cushion exposed small windows and Flyknit fabrics bring more colorful gradation colors to running shoes, Boost shoe materials and highly recognizable white particles.

Of course, these technologies first changed the wearing experience, lighter and more comfortable.

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AirMax

As for Nike's two new technologies this year, the whole palm air cushion Vapor Max has not yet been listed, automatic shoelace running shoes, Hyper Adapt1.0 priced at $720, has not had a more profound impact on the market.

The Nike Tech Pack sportswear series adopts Therma-Sphere honeycomb technology, and there are rival products that exist in the competition, such as Adidas Climaheat and Under Armour Storm series. More importantly, Therema-Sphere is a technology hidden in fabric interlayer, and consumers can not see clearly.

Vapor Max

Hyper Adapt1.0

Therema-Sphere Max Jacket

In Shelly Banjo's Nike stock rating downgrades report, Nike has not yet launched the market with exciting new technologies and styles in the past year.

"Whether it is to accelerate the development of new products or take more stringent measures to protect the loss of talent, Nike desperately needs a way to solve the problem."

Otherwise, it will be like the spring NMD sale in 2016, when Adidas pushed the new product when it seemed vulnerable.

This is the ceiling that Nike meets.

In the "fast fashion" competition, people fall behind, and sports competitive advantages are being reduced bit by bit.

Despite the good news at the end of the year, Nike also has some good news: for example, the automatic shoe lace Hyper Adapt sells well according to fortune. Although the new technology can be fully promoted, it is still a question mark; Nike has just announced a new plan to break the marathon limit and sponsor three athletes to run for 2 hours. The official product line will also be released in 2017, which may help Nike set up a new competitive barrier in the field of professional sports.

Looking back at the whole 2016, Nike is one of the only 22 stocks falling in all blue chips, and is the worst performing, down 15% from 61.5 in early 2016.

In the past 30 years, Nike's share price has fallen only 6 times, the only time it has fallen for two consecutive years is 1983-1984. At that time, Nike's market was being robbed by Reebok (Reebok).

Later, Reebok was acquired by Adidas in 2005 and became a loser who could be sold repeatedly.

Even then, Nike soon came through.

The question is this time?

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