Yangcheng Evening News all-media reporter Zhan Shuzhen
Nike recently released its latest financial data, however, the performance failed to meet market expectations, causing investors to worry, causing the stock price to plummet, extending the decline to 30% for the year.
According to the financial report, in fiscal year 2024, Nike Group achieved revenue of 51.362 billion US dollars, a year-on-year increase of 1% on the basis of constant exchange rates; Net profit was US$5.7 billion, up 12% year-on-year. Its fourth-quarter revenue was $12.61 billion, down 2% year-on-year, below expectations of $12.84 billion.
Regions such as North America underperformed
In addition, Nike forecasts a 10% decrease in revenue for the first quarter of fiscal 2025 (June-August this year) and lowers its outlook for the year ahead, expecting a single-digit percentage decline in sales in fiscal 2025.
During the conference call, Nike executives noted that this forecast is mainly affected by a combination of lower wholesale orders, new products falling short of expected size and seasonal factors.
The warning signs caused the company's shares to close down 20% on Friday, making it the company's worst trading day since its IPO in December 1980, Wind data showed. The plunge wiped Nike's market value by $28 billion, from $142 billion a day earlier, to $114 billion.
In terms of revenue figures, Nike's overall revenue performance in fiscal year 2024 is weak. From fiscal 2021 to fiscal 2023, the company's revenue was $44.538 billion, $46.71 billion and $51.217 billion, respectively, a year-on-year increase of 19%, 5% and 10%, respectively. Revenue of $51.36 billion in fiscal 2024 is not much different from the previous fiscal year.
In terms of regional distribution, Nike's performance in North America, Europe, the Middle East and Africa was poor. In the North American market, Nike's footwear revenue for the year was US$14.537 billion, down 2% year-on-year, dragging down 1% to US$21.396 billion. In the Europe, Middle East and Africa market, Nike's apparel business revenue for the year was US$4.38 billion, down about 6% year-on-year (excluding currency effects, the same below), and the footwear business revenue fell 2% year-on-year in the fourth fiscal quarter, dragging the full-year revenue growth to slow down to US$8.473 billion.
Nike noted in the conference call that the company took "aggressive action" amid weakness in key franchise businesses, increased macroeconomic uncertainty and the continuation of "uneven consumer trends" in EMEA and other markets. FX headwinds are also weighing on the outlook, management said.
A number of investment firms immediately adjusted Nike's stock ratings. JPMorgan Chase, for example, downgraded Nike stock to "neutral" after rating it as "overweight." Analyst Matthew Boss said: "We believe that Nike's timeline to re-accelerate revenue growth will be stretched during the transition period of the franchise product lifecycle, and the global macro backdrop will complicate the way forward. ”
Morgan Stanley downgraded Nike's rating to "hold" from "overweight", mainly due to the company's lower-than-expected performance and downgrade of its outlook for the future. Alex Stratton noted: "While Nike is undergoing a strategic change, its recent performance has been littered with poor quarterly results and cuts in its guidance. She added, "We believe this P&L volatility will persist in the near term, and Nike's long-term growth and earnings trajectory will then become uncertain and lower than our previous assumptions." ”
Revenue growth in Greater China continued
In fiscal year 2024, Nike Greater China continued the growth momentum of the previous fiscal year, showing a steady development trend. During the reporting period, Nike's revenue in Greater China was US$7.545 billion, up 4% year-on-year, up 8% year-on-year on an constant currency basis, and EBIT (EBIT) in Greater China was US$2.309 billion, up 1% year-on-year.
It is worth mentioning that in the fourth quarter of fiscal year 2024, Nike's revenue in Greater China increased by 7%. In the past 618 shopping festival, Nike won the first place in the sales list of Tmall sports and outdoor brands and stores, and also won the first place in 10 lists, including the sales list of Tmall running and basketball categories, the sports and outdoor live broadcast list, the sports and outdoor member turnover list, and the sports and outdoor new member recruitment list.
However, Nike explained that this was due to the contribution of several points brought by Tmall's earlier 618 shopping holiday, excluding this time advantage, the weakness of the company's market channel persisted. Overall, Nike's management is confident in its long-term competitive position in China.
In fiscal year 2021, Nike's revenue in Greater China increased by 24% year-on-year to a high of $8.29 billion, but in fiscal year 2022 and fiscal year 2023, its revenue in Greater China declined for two consecutive years, falling to $7.547 billion and $7.248 billion, respectively.
Nike Inc. President and Chief Executive Officer Ruoxiu Tang said, "We are making the necessary adjustments to drive Nike's next phase of growth. We've made progress building a new, long-term innovation cycle, telling a more impactful brand story, and working with our reseller partners to grow and expand the market. ”
The rapid rise of domestic sports brands
In recent years, the rapid rise of domestic sports brands such as Anta Sports, Li Ning, Xtep International, 361 Degrees, Hongxing Erke, etc., has significantly attracted the attention of more and more young consumers. Taking Anta Sports, Li Ning, and Xtep International as examples, their revenue has all achieved significant growth from 2021 to 2023. ANTA Sports' revenue increased from RMB35.512 billion in 2020 to RMB62.356 billion in 2023, an increase of 76%; Li Ning increased from 14.457 billion yuan to 27.598 billion yuan, an increase of more than 90%; Xtep International increased from 8.172 billion yuan to 14.345 billion yuan, an increase of 75.5%.
These domestic brands are not only dependent on the domestic market, they have also further strengthened their competitiveness in the high-end market through the acquisition of internationally renowned brands. FOR EXAMPLE, ANTA SPORTS OWNS INTERNATIONAL MID-TO-HIGH-END BRANDS INCLUDING FILA, DESCENT AND KOLON, AND IS ALSO THE LARGEST SHAREHOLDER OF ARC'TERYX'S PARENT COMPANY. Li Ning owns the AIGLE outdoor sports goods brand.
Nike's management acknowledged that the company was lacking in innovation, especially in the most recent fiscal year, when competitors made significant progress in the fitness and running space. The company is aware of the challenges in the running product segment and is committed to accelerating its regaining market advantage through measures such as doubling down on innovation and launching new sneakers during the Paris Olympics.
Under pressure, Nike is actively seeking to reinvigorate the market. In the 2024 sporting event, Nike seeks brand exposure through the European Championships and the Olympics. Nike is the main sponsor of the ongoing European Championship and has supported 9 of the 24 participating teams, significantly increasing the brand's visibility in the European market. At the upcoming Summer Olympics in late July, Nike will provide uniforms and related sports equipment for a number of teams, including the Chinese women's basketball team and the Chinese track and field team.
These initiatives demonstrate Nike's increased investment in product innovation and marketing, as well as strengthening brand exposure at global sporting events in an effort to regain market share and secure a long-term competitive advantage.
Editor: Zheng Jianlong
Source: Golden Sheep Network