China has become a battleground for global consumer giants, with mixed results in their Q2 earnings reports, highlighting the remarkable performance of sports brands.
As the curtain rises on Q2 earnings reports for U.S. stocks, many consumer giants have collectively shown slowed growth, particularly struggling in the Chinese market. Starbucks reported a significant 14% decline in same-store sales in China. L'Oréal saw its revenue drop by more than 2% in China and other regions, Procter & Gamble's sales in China fell by 9%, and Coca-Cola's net revenue in the Asia-Pacific region decreased by 4% year-over-year.
However, several companies have posted impressive results in China:
Nike reported Q2 revenue of $1.863 billion in the Chinese market, a 7% increase, accounting for 15% of its total revenue. This marked the fifth consecutive quarter of growth.
Adidas achieved Q2 revenue of €822 million in China, up 9.3%, making up 14% of its total revenue.
Canada Goose's latest financial report showed a 12.3% year-over-year increase in sales in China, reaching CAD 21.9 million.
Skechers saw an 8.2% increase in revenue from the Chinese market in the first half of the year, with over 3,500 stores in China.
Nike CEO Matthew Friend expressed long-term confidence in Nike's competitive position in China.
Skechers CEO John Vandemore noted in an earnings call that the recovery in the Chinese market is steady, and they expect better results in the second half of the year.
The standout performance of these brands, mostly sportswear companies, can be attributed to the nationwide fitness trend and the explosive growth of outdoor activities in the post-pandemic era. The Chinese sportswear market is expanding rapidly, becoming a key area for international sports brands seeking revenue growth.
Despite this, international sportswear giants still face significant threats from local brands.
According to 2023 financial reports, domestic sports brands Anta and Li Ning achieved revenues of CNY 62.36 billion and CNY 27.6 billion, respectively, ranking first and third in the Chinese sportswear market. Nike's revenue in China was $7.4 billion (approximately CNY 53.14 billion), placing it second.
Adidas CEO Bjorn Gulden mentioned in the Q2 earnings call that Adidas is constantly battling for market share in China, but the competition from local brands is fierce. Many local brands are manufacturers that directly enter the retail market through their stores. Their speed and value proposition to consumers differ from Adidas, and they are quicker in making decisions. Adidas is working hard to adapt to this situation.
