Nike’s six months-revenue at $16.183 billion, China soars with +19%
China has overtaken Western Europe for the Nike brand. In the first six months of the year, the EBIT generated in China and neighbouring countries exceeded that produced by Western Europe, making the region the second-best contributor to the group's profits after North America.
In the first six months of the fiscal year, ending on 30th November, the US sport giant's leading brand recorded a revenue of $16.183 billion, growing by 9% before exchange rate adjustments (+6% after them). Sales have increased across all markets: North America remains of course the mainstay, with $7.681 billion (+5%), followed with $3.148 billion (+11%) by Western Europe, where apparel sales notably leaped by 25% compared to the previous year. But China, third-placed in revenue terms with $2.075 billion, was the most dynamic region, posting a 19% sales increase.
"Mainland China continues to deliver a solid performance, with ten consecutive quarters featuring double-digit growth, and yet another quarter with triple-digit growth for nike.com. We nearly tripled the sales figure for Singles Day this year, explained Nike President Trevor Edwards. Our success stems from the decision to offer exclusive products on nike.com and in our own stores, and also from that of reserving high-end products to Nike+ members."
Above all, the China region offered the group's best profitability performance. Over the six-month period, the Nike brand recorded a stable overall EBIT at $2.545 billion, despite losses for $1.390 billion by its Global Brand Division, dealing with licensing contracts.
In the same period, North America contributed with $1.916 billion, while Western Europe's profit contribution fell by 21% to $628 million, and so did that of the other European markets with $139 million. Emerging markets too have lost ground, falling by 18% to $408 million, while Japan, after a string of troubled seasons, rose by 18% to $98 million. As for China, it grew by 14%, reaching $746 million, enough to overtake Western Europe and to produce a flattering margin of nearly 36%, close to the figure achieved by its main competitor Adidas in the nine months ending in September (36.9%).
Nike is of course keen to keep up the pace in China. "The market in the region is constantly fuelled by high levels of sporting participation, said Trevor Howard. The Shanghai marathon for example was run by 38,000 athletes, and four times that number wanted to take part. Whether in-store or on the street, the buzz around the brand is visible, and it translates into sales. We are witnessing an incredible rise in the online business, and we are operating more than 6,000 stores in the region. We are truly well-established, and this allows us to expand, tell captivating stories and have a positive impact. Our best asset, always a beneficial factor for us, is the increase in sporting activity."
Although it is fair to question the quality and variety of the 6,000 Nike stores in China, the brand's meteoric rise in the country is encouraging the group to bet on this market, where Nike is keen to leverage its potential by developing the sportswear, running and basketball categories, and the Jordan brand.
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