The resurgence of German sports apparel retailer Adidas in North America region has adversely impacted the business of Nike in the region which has long been its largest and most profitable market.
Oregon-based sportswear giant Nike noted a steady slowdown in North America during the second quarter of this fiscal for which it announced the results last week. Adidas, on the other hand, noted a cheerful performance in the third quarter of the current fiscal.
Nike’s growth was primarily driven by EMEA, Greater China and APLA regions, clubbed with progress in the sportswear and basketball segments. Revenue from Greater China rose by 16 per cent and Europe by 19 per cent. It dipped 5 per cent in North America. Growth in APLA was 6 percent. Overall, the revenue increased by 5 per cent to US $ 8.6 billion for the company.
The stronger dollar and higher costs related to new launches are likely to result in a decline in gross margins further by 125 to 175 basis points in the third quarter for Nike.
Tough competition in the region has forced Nike to revise its third-quarter expectations. Despite restructuring of its business, Nike does not expect to have a positive third quarter in the region.
Nike is also intensifying its efforts to promote its products to snatch market share from Adidas’ retro Superstar and Ultraboost shoes.
Now it would be interesting to see that how Nike will be able to tackle the rising competition from Adidas in its biggest market. Adidas’s performance in North America has also refuted claims of many experts who termed the retailer’s popularity a short-lived situation.
