Adidas And UA Began To Encroach On The Nike Market.

The largest sporting goods group in the world

(NYSE:NKE) released the 2017 quarter second quarter results. In the 3 months ended November 30, 2016, the net profit of Nike increased 7% to 842 million US dollars compared with the same period last year, and the income increased 6% to 8 billion 180 million US dollars compared with the same period last year, higher than the expected 8 billion 90 million dollars of Wall Street. However, Nike's basketball business and gross gross profit margin continued to drop, causing the industry's concern.

By Region:

In the second quarter of November 30th, sales in North America increased 3% to $3 billion 650 million over the same period last year.

Sales in the Greater China region rose 12% to $1 billion 60 million compared with the same period last year, excluding the impact of currency changes, and sales increased by 17%.

Sales growth in Japan was strongest, up 16% to $238 million over the same period last year.

The decline in tourist volume caused by geopolitical instability in central and Western Europe was 1% and 7%, or 328 million and 1 billion 385 million, respectively.

It is noteworthy that Nike's basketball business is facing competitors.

The signature sneakers series launched with NBA star Steven Curry are under pressure. The sharp drop in sales of this business has a certain impact on total Nike sales.

In the fiscal year ended May 2016, basketball accounted for 5.1% of the total sales revenue of Nike, and the Jordan brand of the main basketball business accounted for 10% of the total sales.

In order to cope with the declining demand and increasingly fierce competition in the basketball market, Nike has readjusted the design of basketball series products and launched a low price Jordan31 and KobeA.D. to consumers.

Basketball is the biggest advantage of Nike, but with the changing concept of consumption among young people, the project is rather awkward for Nike.

Earlier analysis commented that Nike, once ruler of the sportswear market, is facing fierce competition in the market environment. It is accelerating the loss of its credibility in the ruling market, declining market share, and becoming a strong Nike.

However, in the second quarter earnings call conference, Nike brand President Trevor Edwards pointed out that after a series of strategic layout, Nike's basketball business is recovering and is expected to resume growth after May 2017.

The company said that North America as the brand's largest market will maintain its growth trend in the second half of the year by virtue of its high gross profit margin and tight inventory level.

However, due to increased production costs, stronger US dollar and higher retail prices, the gross profit margin of Nike fell to 44.2% in the quarter.

In addition, Nike North America's promotional efforts and global inventory levels are rising.

Nike gross margin declined for second consecutive quarters. Bloomberg analyst Chen Grazutis pointed out that this would mean that the company would rely more on discount sales to gain sales growth, which is a very bad sign for the company.

NIKE will shuffle the top three executives to become the chief executive officer of MarkParker to take the picture of CEOMarkParker.

However, Mark Parker, chairman and chief executive of Nike, expressed satisfaction with the result. The company expects annual revenue to grow at a high level.

Meanwhile, MarkParker stressed for the first time that the group felt the competitive pressure of competitors Adidas and Under Armour and will continue. But he reiterated that the group revenue target before 2020 would increase to $50 billion.

According to the world clothing and shoe net, the peak period of Nike has passed. The reason is that according to the Cowen Consumer Tracker survey, 18-34 year old consumers' preference for Nike clothing has dropped from 55% to 44%, while the proportion of Adidas (OTCBB:ADDYY) and Under ArmourInc (NYSE:UA) is gradually increasing and begins to encroach on the market of Nike.

In addition to efforts to save basketball business, Nike also expects to compete with Adidas in the marathon. As early as the summer of 2014, a project to break through the marathon 2 hour mark was launched, but more than a year ago it began to study the specific marathon shoes solution.

Adidas, the main competitor of the brand, is doing similar experiments.

The project has been developed for at least two years, and a running shoe shoe has been developed. It is also the sponsor of the current marathon world record holder and Kenya elite DennisKimetto.

As of press release, Nike shares rose 1.85% to $51.79 per share, but in the past year, its share price has fallen by 31%, far from the industry, with a market value of about $86 billion 134 million.

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