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Nike, Adidas see slower sales in China
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SHANGHAI, CHINA – Shoe giants Nike and Adidas have seen a recent slowdown in sales from China, state media reported Friday.
In the third quarter report released Wednesday, Germany’s Adidas Group said its revenues decreased six percent to $4.28 billion from $4.58 billion in 2008. Sales declined in all regions except Latin America, and the Asia market saw a drop of nine percent, mainly as a result of sluggish sales in Japan and China, the Global Times said.
Likewise, Nike’s financial results for fiscal 2010 first quarter ended on August 31 and also showed losses. Global revenues decreased 12 percent to $4.8 billion, compared to $5.4 billion for the same period last year. Revenue for Greater China was down 17 percent from last year with footwear falling 17 percent and both apparel and equipment declining 16 percent.
Experts said that the lower China sales were not totally attributable to the global financial crisis.
Zhang Qing, CEO of Key Solution, a sports consulting firm, told the newspaper that the performance has a strong connection with the companies’ distribution channels.
In China, Belle and Daphne are the main distributors for Nike and Adidas. But beginning last year, Belle closed about 50 exclusive Adidas shops, and Daphne shuttered another 30.
Although the sales income of Daphne International in the first six months saw growth of 11.5 percent, the results were attributed to the development of its own brands rather than relying on foreign sports brands.
Daphne said the shops for the two brands were closed due to lower profits. As of the first half of 2009, there were only 107 Adidas retail outlets and eight Nike shops, and the company said all the Nike outlets will be closed in the second half of this year.
In Belle’s report for the first six months, the income from Nike and Adidas was $486.25 million, up 2.5 percent year on year, the paper said.
Belle blamed overstock for the recent losses. In order to reduce inventory, stores have cut prices by more than 70 percent, which is less than it is sold at factory prices.
Key Solution’s Zhang told the Global Times that excessively high expectations for a post-Olympics sales boom that never materialized also led to Adidas’s reduced profits.
Adidas spent an estimated $80 to $100 million to be the official sponsor of the 2008 Beijing Olympics. But the sponsorship didn’t translate into higher profits for the brand.
Zhang said that despite the lower performance, Adidas and Nike are not to be counted out. “They are still the major players in first-tier cities. And they could build off that to make a comeback,” he said.
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