The Swoosh brand, which grows at double-digit rates in the Old Continent, expects to exceed 10,000 million dollars annually in sales and end 2020 with record turnover in the country.
Nike hits Adidas at home. For the first time, the American company has exceeded the three stripes company in Germany in footwear sales, this represents more than 60% of the income of both companies. A historical milestone that goes beyond symbolism, as it highlights two opposing trends: while the German company continues to lose business in the Old Continent, the Swoosh brand grew at a double-digit pace and aspires to overcome the barrier of the 10 billion dollars of revenue in the region in 2020.
“The Nike brand is on fire and continues to take significant market share,” insured Mark Parker, who has taken over the executive presidency in 2020, during the presentation of financial results corresponding to the first six months of the fiscal year.
Between June and November, Nike sales were up 14% in Europe, Africa, and the Middle East (EMEA), and almost all of its product categories, from sportswear to other brands such as Jordan witnessed “double-digit growth,” said Parker. This is a breakthrough that the US multinational recorded at the end of 2018, sales in these markets increased by 6%, to 9.8 million dollars.
Nike sales were up 14% in Europe, Africa, and the Middle East (EMEA) between June and November,
The growth rate in this market is also higher than that of Nike on a global scale, since, at the end of the first six months of its fiscal year, which goes from June to May, its revenue rose by 9%, to 21 billion dollars. On the other hand, the net profit obtained in Europe stood at 1.1 billion euros, 18% more than in the same period of the previous year.
Nike’s strength in Europe contrasts with the downward trend of Adidas, whose revenue has declined in this market over the past two years. In the absence of knowing the economic results of 2019, the German brand managed to stop the draining in sales in Europe and ended the first nine months with revenues of 4,668 million euros (5.2 billion dollars), 0.1% less than the previous year.
On the other hand, the American company not only managed to overtake Adidas in its own home but as the manager said, “Nike continues to be the number 1 brand in all of our key cities within EMEA.” The featuring the key cities are Barcelona, London, Paris, Berlin, and Milan; five of the ten cities that Nike pointed out in 2017 as “keys” to map its future plans.
That year, the so-called direct consumer offensive had just come to light and led to the transformation of Nike’s business and its entire distribution network, which currently focuses on ten premium operators per country. The objective: to strengthen its own sales channels, which already contribute 31.5% of the group’s revenue.
Adidas lags behind, it had initially opted for a less tough restructuring
Adidas lags behind, it had initially opted for a less tough restructuring. The German brand does not break down the market share of its own sales channels in its reports, although in its annual report of 2018 it assured that it expected that by 2020 its own sales channels would contribute “60% of the total”.
It was in Europe that much of these changes began to apply, which not only modified a territorial restructuring but also of the product lines. The great challenge that Parker established then was to accelerate the launch of new products, so the creation cycle was reduced by half based on user demands. A system that, has paid off until now.
It has also staked to strengthen the children’s and women’s lines. Regarding the first, Nike has promoted in recent months through proposals focused on gaining local relevance. The most relevant, an adaptation of the Just Do It campaign started with Colin Kaepernick, which in Europe refocused on the values of girls; “we saw the Kids business grow strong double-digits.” said Parker, who did not specify the turnover of this division.
Sportswear apparel for women grew in Europe faster than in any other market during the first semester
On the other hand, sportswear apparel for women grew in Europe faster than in any other market during the first semester, although the company does not indicate its revenue in this category. One of the keys, Nike pointed out, has been the launch of the T-100 line, produced in less than 120 days as part of the strategy to respond to the immediate need of the consumer.
Another of the key campaigns that have driven the American brand to take over Adidas has been the Berlin Wall. In a symbolic year for Germany, because in 2019 thirty years had passed since its fall, Nike emphasized local activations that claimed multiculturality and union through sport and its athletes, who have ended up with “the leadership in this country” said Parker.
Another of the keys to understanding the progression of Nike in Europe in recent months is its association with ASOS, and above all, Zalando. Both ecommerce play a fundamental role and, with the latter, in addition, a pilot program has been designed to unify their inventories. The project, initiated in Germany, will be extended to seven other countries of the Old Continent in 2020, which will be the laboratory experiment before applying it on a large scale.