Nike'S Rise Has Nothing To Do With Fried Shoes.

Nike has made a fortune. It's not surprising at all. That night rose 4%, not only to create a new high, but also to boost the market.

Nike is still the largest consumer magnate since its launch.

Nike's financial year is closely followed by students. The 6-8 month is the first quarter of the 2020 fiscal year, and the second quarter after September.

Revenue in the quarter reached $10 billion 700 million, an increase of 7% over the same period last year. If the effect of the exchange rate was eliminated, it increased by 10% compared to the same period last year, maintaining the growth rate of the previous quarter. At the same time, gross profit margin increased from 44.2% in the same period last year to 45.7%. The increase in gross profit margin was mainly due to changes in the supply chain. Net profit increased by 25% over the same period last year, reaching 1 billion 400 million US dollars.

Adjusted earnings per share were $0.86, much higher than Wall Street's unanimous estimate of $0.7.

Let's talk about growth.

1. high speed growth engine in Asia Pacific Region

The Greater China region has grown for the 20 consecutive quarter.

Many investors first thought of the popular fried shoes in the early stage. Indeed, the limited edition of new shoes has a great addition to the brand's heat. But for a consumer company, which is not mainly luxury goods, the sale is worth more attention.

No matter whether the shoes are made or lost, the yellow cattle have been planted or fat. At least, Nike has not benefited from it. And we can see from the classification data, the Greater China region footwear, clothing and accessories three categories of year-on-year growth rate is 22%.

Horizontal comparison of the past 5 quarters of Nike Greater China Classification Project revenue growth, we can find that clothing and equipment growth is more obvious than footwear.

2. business growth to boost profits

China's pre tax profit increased by 33% over the same period last year, and it took pride in the world. The main reason was more online cooperation with Tmall and WeChat and more online sales.

Meanwhile, online sales in Europe and the Middle East also increased by 22% over the same period. The growth in these areas is interesting and striking, and the effect of Nike App promotion in Europe is obvious. After all, Europe is the base of Adidas. This time, it has also gained two digit growth in revenue.

3. summer CONVERSE brand revival

CONVERSE's brand growth has always been a drag on growth, with negative growth in Europe and the Americas. Asia, especially Southeast Asia, is particularly suitable for canvas shoes because of its geographical position. Therefore, Southeast Asian countries such as Thailand have been the cornerstone of CONVERSE in addition to the summer season.

This season coincided with the summer. CONVERSE's brand grew by 5% over the same period last year. It's a good achievement, and this is the best season since Nike acquired CONVERSE.

4. share repurchase

Nike has bought 119 billion shares this year, equivalent to $995 million, and has bought a total of $235 billion since its repurchase in June 2018, worth $2 billion.

The total value of the repurchase announced at that time was US $15 billion, so the good play is still there.

5. the new growth point of women's and children's products is still shining.

Since Lululemon has been playing the leading role in the Yoga market, Nike ADI and other giants have joined the competition of women and other subdivision garments. Female product sales account for 25% of Nike's total sales, and half the sky is just around the corner.

At the same time, we should also see some potential risks.

First, the profit growth in the North American market is not satisfactory. Although the overall revenue in North America reached 4% this quarter, which is very good for a mature and less than 1% inflation market, the overall pre tax profit growth is only 2%, far below the average level. Electricity supplier sales will raise profit margins. Unfortunately, the electricity providers in North America are not as fast as those in Greater China and Europe. Nike needs to do better operations in North America.

Second, the impact of exchange rate increases. Although the global market is in the interest rate cut cycle, the Fed's pace is not as big as that of other central banks, which is also a great pressure on the US dollar.

Third, the impact of tariffs. In addition to Asia, the European region is also affected by tariffs. Europe has always attached importance to taxation and is more strict in its implementation. Once Nike threatens local enterprises in Europe, it is more likely that the authorities will "strictly handle" tax policies. No one can blame this.

Fourth, Greater China faces competition. Although the growth engine of Greater China is booming, other brands' outstanding products are also being born. Lining and Anta, on the other hand, are gradually challenging the Adidas Nike head on sports products. The rising tide of domestic goods will also make more and more consumers focus on domestic brands.