Today, Nike reported strong financial results, including earnings-per-share of $0.88, ten cents more than analysts expected. But one thing stood out: The company’s sales dropped in China, the only major market where that happened.
The company sold $574 million worth of goods in China, its third-largest market, accounting for about 9% of its total revenue.
While Nike remains the leading sports brand in China, the company’s executives talked about their plans to “reset” the Chinese market for several quarters as they work through accumulated excess inventory there. Executives noted changes in pilot retail stores showed significant sales increases that they hope to replicate elsewhere in the country.
Nike has been successful at selling premium products but needs to do more to segment the market to better target Chinese consumers, Nike Brands president Trevor Edwards told analysts. One part of Nike’s strategy in China was bringing National Basketball Association stars Lebron James, Kobe Bryant, and Kevin Durand on a publicity tour.
The company has been challenged by Adidas’ NEO brand, which attracts younger Chinese in search of lower priced gear. Domestic competitors like Li Ning and Anta have also put pressure on Nike.
Nike probably won’t see big growth in China anytime soon, reporting only a small increase in future orders:
