Nike'S Biggest Source Of Revenue Fell For The First Time In North America.

Start a new fiscal year with a mixed performance list.

According to the world clothing and shoe net, Beijing sports giant Nike announced its first quarter fiscal year 2018th in September 27th. In the three months ended August 31st, sales in the Greater China region increased 9% to 1 billion 108 million US dollars, maintaining a steady upward trend.

But sales in the North American market, the largest source of revenue, fell 3% to $3 billion 924 million, the first decline in 10 quarters, dragging down Nike's overall performance.

Overall, Nike's first quarter profit fell 24% to $950 million, and earnings per share were $0.57.

The expected $0.48.

Operating income of $9 billion 70 million was basically unchanged from the same period last year, less than $9 billion 80 million expected by the market, and also the slowest quarterly growth in nearly 7 years.

Taking into account the pull of the Olympic Games and the European Cup last year and the divestiture of the group's golf business, the pressure on the revenue increase this quarter has increased.

After the release of the earnings report, Nike expects the second quarter revenue growth to remain in the single digit range, and does not exclude that the North American market will further decline in revenue. It expects to rely on overseas markets to achieve an annual revenue growth of about 5%.

So far this year, Nike's share price has risen 5%, and has fallen by about 2% in the past 12 months.

Nike's stock price ups and downs in the past 12 months

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As a matter of fact, in the first quarter, the revenue of Nike's main brand was $8 billion 600 million, an increase of 2% over the same period, mainly due to the increase in garment business.

Converse slipped 16% to 483 million dollars and was trapped in a slump in the North American market.

Judging from the product category, Nike has the highest income in the footwear industry, reaching 5 billion 500 million US dollars, with clothing revenue of US $2 billion 700 million, while other sports equipment revenue is US $420 million.

According to the world clothing and shoe net, in June this year, Nike introduced a new round of company adjustment program called Consumer Direct Offense, which aims to speed up consumer demand. Apart from the global layoffs of 2%, the global six regional structure has been simplified to four regions, namely North America, EMEA (Europe, Middle East and Africa), Greater China and APLA (Asia Pacific and Latin America).

From the geographical region, Nike has maintained a consistent growth trend in the Greater China region, with sales of $1 billion 108 million in the first quarter, up 9% over the same period last year.

However, compared with the 16% increase in the previous quarter, the growth rate of revenue in the Greater China region slowed down.

In addition, revenues in Asia Pacific and Latin America increased by 5% to 1 billion 189 million US dollars, while sales in Europe, the Middle East and Africa increased by 4% to US $2 billion 344 million.

North America, which occupies 1/3 of the global sporting goods market, is also the home of the brand, becoming the only declining market in the four major regions of the Nike, with sales falling by 3% to $3 billion 924 million, the first decline in the past 10 quarters.

Among them, footwear income of 2 billion 434 million U.S. dollars, down 3% over the same period last year.

In this regard, the US brand is cautious. Because the market predicament is difficult or difficult to solve in the short term, the income of the North American market will not be further reduced.

In response, Nike pointed out in the earnings call conference that it was trapped in the overall downturn in the market, including Sports Authority, Sports Chalet, Finish Line and Dick's Sporting Goods. Some of the leading sporting goods retailers in the United States appeared bankrupt or sales fell sharply, and channel damage aggravated the weak performance of the North American market.

Apart from the overall downturn in the North American retail market, the strength of competitors is another factor in the decline of Nike's sales.

In September 18th, The NPD Group, a retail research firm, released the latest report on the consumption of sports shoes in the United States, the first place in Nike. Its market share dropped from 39% to 37%. Adidas replaced Jordan to second, and its market share increased nearly 6.6% from 6.6% in the same period last year.

The growth rate of Adidas in the American sports shoes industry is amazing. Apart from the strong sales of Stan Smiths, Superstars, Ultra Boost and Yeezy, Adidas's share of basketball shoes has risen sharply, and its erosion is the market share of Nike and Jordan brands.

In addition, it is noteworthy in the earnings report that the gross profit margin of the group dropped by 180 basis points to 43.7%, which was mainly affected by the sale.

Wall Street analyst Camilo Lyon said in the report that many sporting goods dealers respond to weak demand through promotional methods, mainly footwear products.

At present, dealers and other wholesale customers occupy about 3/4 of Nike's business. American brands are trying their best to get rid of the unhealthy channel providers, and speed up the layout directly to the DTC business, including the opening of self owned stores and the establishment of online sales with Amazon.

Since 2012, the revenue of Nike DTC has increased by more than 20% for five consecutive years.

The direct selling business has not increased costs, and Nike says it has been cutting costs this year.

The first quarter's report showed that sales management costs fell 1% to $2 billion 900 million, down 4% to 2 billion 700 million dollars in the previous quarter.

Nike's overall management costs will continue to decline following the announcement of a 2% reduction in staff and a reduction in performance.

According to the world clothing and shoe net, Nike began to announce the number of futures orders in its earnings report starting from the first quarter of fiscal year 2018.

This data refers to the total volume of goods sold to dealers in the next quarter, which is an important basis for investors to determine how much money they can make in 1980 since they were launched in 1980.

Perhaps in Nike's view, because the proportion of direct selling business is increasing, more and more goods are directly sold to consumers. The value of future orders data has changed and should be separated from revenue reports.

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