Interpreting Nike'S 2019 Financial Report: Facing Women

On June 28, Nike released its 2019 financial report as of May 31. The data showed that the overall revenue of Nike Group was $39.117 billion, up 7% year on year.

　　 Re ranking: e-commerce, women, wholesale

Nike said that its direct sales revenue in fiscal year 2019 reached $11.8 billion, of which online sales increased by 35% year on year and same store sales increased by 6%.

Nike's female business grew by double digits in FY19 and continued to grow in FY19. Nike has launched more female sports equipment, and transformed Jordan sneakers for female consumers. It will continue to promote the sales of female shoppers in the future.

According to Nike, sales in wholesale channels have increased by 10% this year.

　　 Greater China broke $6 billion for the first time

According to the financial report, Nike's revenue in Greater China in 2019 reached 6.208 billion US dollars, a year-on-year increase of 24% on the basis of unchanged exchange rate, and its profit before tax reached 2.376 billion US dollars, a year-on-year increase of 31%.

This is the first time that Nike's revenue in Greater China has exceeded the US $6 billion mark.

It is understood that in fiscal year 2018, Nike's operating revenue in the Greater China region reached 5.134 billion dollars, and in fiscal year 2019, its revenue reached 6.208 billion dollars. Within one year, the revenue in the Greater China region increased by more than 1 billion dollars.

In fiscal year 2019, Nike's main brand revenue was $37.2 billion, an increase of 11% excluding the impact of exchange rate, mainly driven by direct marketing and key categories. The sales of shoes and clothing have achieved double-digit growth, especially in sports life, Jordan and running business.

　　 Behind 10.2 billion yuan

What is worth noting is the fourth quarter data of Nike. The fourth fiscal quarter sales of Nike increased by 4% to $10.2 billion, breaking the brand's single quarter sales record.

In the fourth quarter, the revenue of Greater China reached 1.697 billion US dollars, accounting for 16.6%, a year-on-year increase of 22%, achieving double-digit growth for 20 consecutive quarters, and the profit before tax increased by 25% year-on-year to 674 million US dollars.

Total sales in North America (excluding exchange rate fluctuations) grew by only 8% to $4.17 billion.

Competitors in the US market, such as Adidas and Lululemo, have threatened the market share of Nike's sports casual shoes and clothing.

Overall footwear sales in North America (excluding currency exchange rate fluctuations) grew by 9% in the latest quarter, while Nike's clothing business grew by 6% and equipment sales grew by 7%.

In the fourth quarter, the revenue of Nike brand increased by 10% over the same period last year, reaching 9.7 billion dollars. Converse sales were basically flat at $491 million.

　　 Seven year itch, try to clean up the third party

It is worth noting that Nike's net profit in the fourth quarter was $989 million, with earnings per share of 62 cents, lower than the average expected 66 cents.

This performance fell short of analysts' expectations, compared with a net profit of $1.14 billion in the same period last year, which was the first time since 2012 that it failed to meet the profit expectations.

The reason why Nike's earnings in the fourth fiscal quarter failed to meet expectations was the high sales and management costs, which increased by 10% to $12.7 billion year on year, mainly for sports marketing investment and global brand activities.

In addition, Nike is also investing in the supply chain to create new products for shoppers more quickly, such as Vapor max running shoes, which is one of the products that Nike is proud of recently, and also a tit for tat confrontation with Adidas 4D running shoes.

In the fourth quarter, its profit margin was affected, partly because of direct sales of Nike investment. We found that the contribution of Nike wholesalers was decreasing.

And Nike is trying to clean up the third-party market, including Amazon.

The blocking of wholesale channels is due to the fact that the physical retail market in the United States is going through a wave of bankruptcy. Recently, large sports retailers including Sports Authority, Performance Sports, Gander Mountain and MC Sports have gone bankrupt, which directly affects Nike's channel sales.

It can be seen from the analysis that the growth of direct contact with female consumers still exceeds the growth of wholesale channels. The latest ranking of Nike is direct sales>e-commerce>women>wholesalers.

In the future, Nike will make greater investment in the women's market. The Women's World Cup is a very favorable evidence. In this World Cup, Nike has won 14 teams' shirt sponsorship, the most in history.

The overall market size of women's shoes and clothing in the United States is far larger than that of men, while the sales of women shoppers still account for less than 25% of Nike's total revenue.

In terms of direct sales, besides opening direct stores, Nike's investment direction will be digital.

For example, the "Nike Fit" foot scan in Nike's app, on the one hand, reduces the $500 billion return market for online purchases, and on the other hand, collects accurate user information. And Nike is trying to clean up the third-party market, including Amazon, in order to strengthen the preparation for facing consumers in the future.

Nike, with a market value of more than 130 billion dollars, is starting to attack the global women's market from the North American market, and is making efforts to face consumers through digitalization.