Nike Stock Surpasses $100... "Momentum Continues with Strong Performance in China Market and Expansion of Direct Sales"

[Asia Economy Reporter Eunmo Koo] Nike (NIKE) has recently shown a positive performance in the stock market, with its stock price surpassing $100. This trend is expected to continue for some time due to achievements in the Chinese market and an increased proportion of direct sales.

According to Samsung Securities on the 11th, Nike's stock price has continued to rise after surpassing $100 following the announcement of strong results for the second quarter of fiscal year 2020 at the end of December last year. Eum Hye Lim, a researcher at Samsung Securities, explained, "As the global sports fashion consumption trend continues, there is an intensifying stock price restructuring centered on global core brands," adding, "The record highs of Nike in general sportswear brands and Lululemon in women's sportswear within the global stock market prove this situation."

Despite concerns about valuation as the stock price hits new highs, growth momentum remains strong. First, it is expected that Nike will reclaim the number one position in its core market, China. Nike has recently recorded double-digit sales growth in China for 22 consecutive quarters and has aggressively sought to expand sales in the high-growth Chinese sportswear market by pursuing the management strategy of 'Of China, For China' several times. Nevertheless, in the Chinese market, Adidas has maintained an advantage over Nike for several years, especially among the millennial generation in China, thanks to the popularity of its 'Originals' products and 'Boost' lineup.

However, signs of change have recently been detected. Researcher Lim said, "Looking at the recent quarterly growth rate gap in China, Nike's overtaking can be confirmed," explaining, "Adidas was the market share leader in 2018, but Nike is expected to have surpassed it since last year. The recent gap in China's sales growth rates has not been reflected in the relative stock price, so this is a phase where Nike's relative attractiveness can be highlighted."

The expansion of digital sales centered on direct sales is also a factor that raises expectations. Last year, Nike's direct sales accounted for 32%, and this proportion has been increasing annually. Researcher Lim stated, "Nike's management has repeatedly mentioned that digital sales will become more important in core performance from this year," adding, "Digital sales inevitably become important in terms of future brand strengthening and profit margin expansion."

Nike continues to invest in securing consumer demand sensing capabilities, such as acquiring the artificial intelligence (AI) company 'Celect' last August. It is also expanding its loyal customer base strategy by increasing the number of countries where its proprietary applications like 'NIKE APP' and 'SNKRS' are launched.

This content was produced with the assistance of AI translation services.