"Nike Inc. ( NASDAQ: NKE) posted dismal quarterly earnings, due largely to its results in China. However, that is not at the heart of the problem. Adidas and Puma are desperately trying to get market share as each has its own deep problems. At the next tier down are Lululemon, Under Armour, ASICS, New Balance, Skechers, and Hoka, also elbowing for market share. Nike's valuation is based as much on the crowded market as any single quarterly financials."
"Nike's Greater China revenue dropped 17% to $1.42 billion. The New York Times reported, "Nike warned that the weakness in China would persist and remain a drag on sales." What is often left out of the Nike China conversation is the strength of local brands, including Li-Ning, ANTA, Xtep, and 361 Degrees. The problem is similar to Apple's, as it is up against local smartphone giants Huawei, Vivo, Xiaomi, and Oppo. Each has a double-digit market share."
Nike reported modest revenue growth of 1% to $12.4 billion while per-share earnings fell 31% to $0.54. Greater China revenue declined 17% to $1.42 billion and the company warned that China weakness would persist and drag on sales. Nike faces aggressive competition from Adidas, Puma and a second tier of brands including Lululemon, Under Armour, ASICS, New Balance, Skechers and Hoka. Local Chinese brands such as Li-Ning, ANTA, Xtep and 361 Degrees hold significant market share, creating a challenge similar to tech incumbents facing local challengers. The stock is down 14% year-to-date versus the S&P 500’s 15% gain.
Read at 24/7 Wall St.
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