Sportswear brand Nike reported positive revenue growth in its Greater China region for the whole fiscal year of 2020, despite headwinds in the retailing industry from COVID-19. The company said its Greater China’s revenue helps to offset its unexpected global losses in the fourth quarter, when nearly all Nike-owned stores were reopened in China.
The company’s revenue in China for fiscal year 2020 increased 8 percent year-on-year and the fourth quarter revenue dropped by just 3 percent. In contrast, total global revenue shows a staggering 38 percent decline in the fourth quarter and a 4 percent drop in its total revenue for FY2020.
China’s relatively early recovery from the COVID-19 shutdown has led to its mention on several brands’ fiscal reports. For Nike, almost all of its stores in China had reopened as of Thursday, while the majority of its stores in North America, Europe, the Middle East, Africa, Asia Pacific and Latin America still remain closed.
Earlier this month, Adidas also reported a return to positive growth in its May revenue, citing the reopening of all its brand-owned or partner-operated stores since mid-April. The opening rates in North America and Latin America, by contrast, were still well below 50 percent as at early June.
Experts are also attributing the sportswear brands’ increasing China revenues to the advanced level of e-commerce penetration. As companies race to shift their offline sales to online, China’s mature e-commerce models and logistics networks offer a ready environment for the transformation, Zhang Qing, CEO of Key Solution Sports Co, a consulting firm on the sports industry in China, told Global Times on Sunday.
“Most of the popular brands in sportswear, such as Nike, Adidas and Puma, have their flagship stores on taobao.com or JD.com. The well-established ecommerce industry means Chinese customers have established online spending habits,” Zhang said.
Online business is proving itself ever more important in a time of social distancing and reduced outdoor activities. According to Nike, its digital sales increased 75 percent in the fourth quarter, with a double-digit jump across all regions accounting for around 30 percent of its total revenue.
With the early recovery of offline sales and a robust e-commerce industry, China is expected to represent an even bigger share of the global sportswear market, Yang Qingshan, a professor at the University of International Business and Economics in Beijing, told Global Times.
“With businesses reopening much later than expected in many countries, notably in some of the biggest sportswear markets such as the US and the UK, many brands are relying very heavily on their Chinese customers for revenue,” Yang said.
Non-essential stores, including clothes shops, were given the green light to reopen for business in the UK on June 15, with social distancing regulations in place. The US announced a phase one stage of recovery only on June 8, allowing a limited number of activities to resume, according to media reports.
China’s sportswear market is expected to reach 310.4 billion yuan ($43.85 billion) in 2020, rising over 8 percent on last year, according to forecast by Statista, a market research firm.
A pedestrian passes by a Nike store in Beijing. Photo: cnsphoto
