Sales in Greater China plummeted by 20%! The national tide is hot, Nike can't sell it?

On December 21, Nike announced the results of the second quarter of fiscal year 2022. Q2 revenue was 11.36 billion U.S. dollars, a year-on-year increase of 1%, slightly exceeding market expectations of 11.25 billion U.S. dollars; at the same time, the 2022 fiscal year ending on November 30, 2021 In the first half of the year, total revenue was US$23.605 billion, a year-on-year increase of 8%.
Overall, Nike's performance in the global market is relatively impressive. However, in terms of regions, the Greater China region, Asia-Pacific and Latin America declined significantly in the second quarter of the financial reporting period, especially the Greater China region.
According to the financial report, in the second quarter of fiscal year 2022, revenue in Greater China was US$1.844 billion, a year-on-year decrease of 20%; compared with US$1.982 billion in the first quarter of fiscal year 2022, a slight decline of 6.96%; and the first half of fiscal year 2022 It can be seen that the overall semi-annual revenue in Greater China has also fallen by 6% year-on-year.
In other regions, Asia-Pacific and Latin America revenue was US$1.347 billion, a year-on-year decrease of 8%; North America revenue was US$4.477 billion, a year-on-year increase of 12%; Europe, the Middle East and Africa region revenue was US$3.142 billion, a year-on-year increase of 6% .
According to the financial report and the explanation of the conference call in the second quarter of fiscal year 2022, the decline in Greater China is mainly due to the impact of the epidemic, the reduction of available inventory due to the closure of factories, and the interruption of the supply chain. In particular, the closure of the Vietnam factory directly caused Nike to cancel the production of about 130 million equipment.
However, supply chain issues have been highlighted in the first quarter of Nike's 2022 fiscal year. At that time, it was also stated that the closed factories caused by the epidemic had a negative impact on the flow of products to stores, fulfillment centers and wholesale partners. And as a result, Nike adjusted its financial expectations for the second half of the year to single-digit growth.
For Nike, the supply chain is the most important and most urgent problem in this fiscal year. At the moment, China will still be the center of the global supply chain. Although the supply chains of some clothing brands have begun to transfer to countries such as Vietnam in recent years, they are still facing the impact of policies, regulations, and the epidemic.
At the same time, 2021 is also the 40th year that Nike has entered the Chinese market. After 40 years of continuous penetration, Nike continues to bind Chinese consumers in terms of channels and products.
It is reported that in terms of products, a commemorative series of shoes and clothing will be launched for Chinese consumers in 2021. In terms of channels, it has also further expanded offline stores and e-commerce channels: during the Tmall Double 11 event (from 0:00 on November 1 to 24:00 on November 11), it won the No. 1 sports outdoor brand on Tmall platform; offline also Continued and steady expansion of stores, according to the big data of Yingshang.com, as of now, Nike has entered 1,447 shopping centers and 518 department stores.
Nowadays, after the rapid development of China's sports shoes and apparel market over the past few years, domestic sports shoes and apparel brands such as Anta and Li Ning have emerged. The market competition has become fiercer. In particular, Anta has achieved a total turnover of 4.65 billion yuan through e-commerce on Double 11 this year. Super high performance surpassed Nike's top position in the Chinese market.
Regarding the future of the Chinese market, Nike remains optimistic and optimistic for the long-term, and expects that the current situation will improve starting from the third quarter of fiscal year 22. However, as Chinese consumers` preference for local domestic brands further increases and the wave of new domestic products deepens, Nike`s performance in the Chinese market may not be able to return to its original level in the short term if it fails to solve the supply chain problem.