On Friday, the Nike Group released its third-quarter financial report in the fiscal year 2018, which was higher than expected. The stock price rose more than 7% after the close of the day. Randri Konik, a retail analyst at Jefferies Group, wrote in a report to clients: Nike's business is back on track."
In the third quarter of February 28, the Nike Group's revenue increased by 6.5% to US$8.984 billion, which was mainly driven by the growth of the international market and the promotion of Greater China. FactSet had expected revenue of US$8.85 billion.
However, Nike’s net loss for the quarter was US$921 million, which was due to the one-time cost of US$2 billion due to the US tax reform during the period. If this is ruled out, Nike’s earnings per share is 68 cents, which is 15 cents higher than the forecast, according to a survey of Thomson Reuters analysts.
Nike also released strong sales forecasts. Chief Financial Officer Andy Campion said on the conference call that the inventory has been reset and that Nike’s North American partner orders are increasing. He expects that the still-falling North American revenue will be almost equal to last year in the fourth quarter and will be Regained growth in the first half of 2019.
This self-confidence stems from some new product portfolios Nike launched in the past quarter, including Nike React, Air VaporMax's extended series of VaporMax 2.0 and Utility, and the first women's AJ, AF series "1 Reimagined", corresponding to running. , lifestyle and basketball category.
We have previously reported that the problem that Nike faces today is the lack of innovative products and the frequent low-cost promotions that come with it. It can be seen that the increase in the gross profit margin of the Nike Group has stagnated and the profit rate has declined. This is reflected in the absence of a strong $1,000 shoe on the shelf. CEO Mark Parker said at the meeting that the company is continuing to expand VaporMax's style and plans to create it as "the first performance shoe with a price above $100."
In addition to VaporMax, Nike listed another Air product, AirMax 270, in spring.
As for React, as a product that Nike plans to use to compete with Boost, according to the financial report, it was revealed that “we initially only provided products to Nike+ members and sold them out within hours. When we expanded the supply, the short We sold the stock for several weeks in a short period of four days. We will use this demand in the fourth quarter." But then, such a result is not a surprising result for Nike's effort to launch a trump card product.
Basketball is another important category for Nike in the third quarter. With the launch of Kyrie4 and PG2 and the first season as an official NBA partner, according to Mark Parker, the growth rate of the basketball category has reached double digits, which is the category Nike has been declining over the past few quarters. A landmark time is the NBA's all-star weekend in Los Angeles. Nike's limited-edition basketball shoes sold with Snapchat are quickly sold out - but it should be pointed out that Adidas, who sees basketball as the next growth point, also spent the weekend. Strong efforts to hold marketing campaigns indicate that the future competition for this category will become more intense.
The first women's AJ, AF series "1 Reimagined" is an investment in the women's and basketball markets. At present, the specific market response cannot be seen. However, it is worth mentioning that Nike was recently caught in the complaint of female employees to the workplace environment. The company's internal investigation has prompted two executives to leave the company. However, there are also views that the departure of brand president Trevor Edwards and vice president Jayme Martin is also related to the recent sluggish performance of Nike and the growth rate of gross profit margin stagnation.
In addition, there was also an acquisition of Zodiac, a consumer data analysis company in New York, that was announced at the same time. Nike has been working with Zodiac for several months, and the deal means that Nike will further accelerate digital transformation and enhance data analysis capabilities. Zodiac official website shows that the company is good at predicting the future behavior of individuals with different data models and consumer analysis.
In December last year, Nike launched the SNKRS e-commerce APP in China. Mark Parker revealed that the app was downloaded 2 million times in the first month. “Nike now wants to get more value from each digital customer. First of all, we are concerned about super fans: For Nike+ members and app users, their average spend is three times that of Nike.com shoppers."
At the same time, Nike announced that it will launch another new retail application for testing in the fourth quarter in Los Angeles, Portland, two cities, it will automatically identify the Nike products recently viewed by consumers, provide inventory information of nearby stores Consumers can make purchases and payments directly through the app. This app may be promoted to global stores in the future or as an updated version of SNKRS.
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