With market share dropping and worldwide sales down 8 percent, Nike is hoping that emerging markets in China and Japan will help put a little bounce back into its upscale athletic shoes.
Nike, a Beaverton, Ore., company that sells sports shoes worldwide, last week announced that profits for the quarter had fallen 30 percent to $52.3 million, off from $76 million. Sales fell to $806 million, off from $876 million.But Nike executives blamed worldwide recession and said they're optimistic sales will rise again as the economy picks up, particularly in Asian markets where more and more consumers are buying Nikes.
Not only will additional effort be made to increase sales in Japan, where the $100-a-pair shoes have long been popular, but Nike expects sales to mushroom in China, company officials said in a press release.
Daneil Loeb, who heads Nike International Ltd. in Hong Kong, said he expects China to become Nike's fastest-growing market. Nike's sales in Asia have tripled to more than $178 million in the past two years, but China still accounts for less than 5 percent of the Nike sales.
Neal Lauridsen, Nike's vice president for the Asia-Pacific region, said China was once regarded only as a source of low-cost labor for making shoes, but is becoming prosperous enough to be considered a legitimate market for Nikes.
With a population of 1.2 billion, China is seen as having the potential to become a very large market, he said.
But securities analysts in the Pacific Northwest and Hong Kong cautioned that only a very small percentage of that number can afford Nike shoes, according to the release. One analyst said it may be five or 10 years before China emerges as a strong market for such shoes.
Studies show Nike as the top U.S. seller of upscale athletic shoes in China, but also show international sales suffering because of the relatively strong dollar.
Liz Dolan, a Nike spokeswoman, estimated that international sales fell
from 10 percent to 25 percent in various foreign markets as the result of currency fluctuations in Europe and Asia.