Recently, the United States Nike Sports Products announced the financial statements for the second quarter of fiscal 2013 (September to November). Data shows that following the 12% drop in first-quarter net profit, Nike's net income in the second quarter of 2013 decreased by another 18% to US$384 million.

For this performance, people in the industry said "unsurprisingly." In addition to the economic slowdown affecting its performance, Nike has also had to face the strong catch-up of Adidas, the impact of casual and fast fashion brands, and the pressure of local brand continuous sales promotion.

Collective siege of local brands

Nike reported in its second-quarter results that its net income decreased from 469 million U.S. dollars in the same period last year to 384 million U.S. dollars, a decrease of 18%. Due to the increase in labor costs and exchange rates, the gross profit margin decreased by 30 basis points to 42.5%.

Nike said that the decline in performance was affected by the downturn in the European economy and the deceleration of the Chinese economy, and it was related to the previous sales of its two brands, Umbro and Cole Hann. The termination of the above-mentioned two brand-related businesses resulted in a reduction of its revenue of approximately US$137 million.

Compared with domestic brands, Nike products have higher prices and will inevitably become the “ultimate” competition targets of many local brands.

In a Nike discount store in Changning District, Shanghai, the “25% off, 20% off, 30% off” sign was particularly eye-catching. A salesperson stated that this discount was given again at the original discount of the product, and the new product also participated in the activity. "The discount on shoes is as low as 40%," the salesman told reporters.

Some people think that under the collective siege of local brands, Nike has to increase sales to resist external shocks in order to maintain its sales status.

The future will be overtaken by Adi.

"This (performance) is not expected." Key to know that the founder of sports consulting firm Zhang Qingxiang "Daily Economic News" reporter said that the North American market is affected by the macroeconomic environment, residents spending on non-essential consumption is falling . In the Chinese market, sports and leisure apparel are still in a sluggish state.

For the continued deterioration of Nike's performance in the second quarter, Zhang Qing believed that it was affected by the delay effect. "Nike's performance is mainly achieved through the channel business. When the market environment is not very good, everyone will adopt a partial insurance strategy and will be cautious in ordering."

In addition, Nike also faces pressure outside the industry in China.

Zhang Qing believes that since the movement has not yet become a way of life for Chinese consumers, consumers must also pursue fashion while demanding products with a certain reputation and functionality. At this point, Nike inevitably competes with leisure and fast fashion brands.

At the same time, the latest performance announced by Adidas obviously puts pressure on Nike, and even some people think that Adidas will surpass Nike to become the “leader” in the future. Adidas’ net profit for the third quarter (July-September) rose 14% year-on-year to 344 million euros. Adidas expects net profit for the year to reach 770 million euros to 785 million euros.

"Nike's position, although it is still difficult to shake the position, the stability of the channel, the brand's marketing capabilities, and the possession of resources, these three indicators are currently unmatched by Adidas." Zhang Qing told the "Daily Economic News" reporter, However, if Adidas makes breakthroughs in these three areas, and the development of the two sub-brands of Shamrock and NEO is better, it is still possible to surpass Nike.