Nike's Quarterly Profit Declines Again China Becomes Redemptive Land

Nike, the world's largest sportswear company, said on the 17th that the company’s sales fell in the second quarter, resulting in a temporary decline in corporate profits. However, company leaders stated that they saw signs of a rebound in profits, and that after experiencing several quarters where the situation is more severe, consumer confidence is expected to increase.

After three consecutive quarters of decline in profits, the Chinese market has once again become a redemption site for Nike.

Nike said that due to the depreciation of the U.S. dollar and the sharp increase in demand in Western Europe, China and emerging markets, orders for goods submitted at the beginning of next spring are expected to increase by 4%. In the second quarter, Nike’s profits fell by 4% to $375.4 million, or 76 cents a share. Thanks to tightening inventory and cost control, the company's revenue fell only 8% to US$4.4 billion. This result is slightly better than expected. Earlier estimates from several analysts surveyed by Thomson Reuters were 71 cents a share and revenue of $4.4 billion.

Nike leaders are also optimistic about the 2010 World Cup and several new products to be sold. Nike brand president Charlie Danson said: “The strength of the Nike brand is still very enviable.” The four-year World Cup, to be held in South Africa next year, will become a potential development market for Nike and the Yinbao brand it acquired in 2007. Nike executives have not disclosed any news about the company’s business plan for the World Cup, but the company said it will be an “unprecedented” marketing plan.

Nike said it will launch "Fresh Air" products next spring, and the "Fresh Air" series will also be a complete replacement of the appearance and performance of Nike's existing air cushion system.

Sam Poser, an analyst with the US investment research firm Sterne Agee, pointed out that Nike had done its best to deal with the financial crisis this quarter, but the company had to continue to face a challenging market until 2011.

For some analysts recommending Nike to reduce risk and reduce cooperation with sports athletes, Nike CEO Mark Parker stated that Nike’s cooperation with athletes and teams is crucial to the company. "In the end, we will make a decision after taking into account Nike's brand strength and the interests of shareholders. This purpose is never changed."

Nike’s share price once rose by 1.25 US dollars to 64.50 US dollars on Thursday.