What Problems Will The Sports And Leisure Industry Face?

According to the world clothing and shoe net, Wells Fargo (Wells Fargo) analyst Tom Nikic said in a report that over the past few years, consumers have flocked to buy Nike, Lululemon and

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But consumers already have enough clothes like this, coupled with the bankruptcy of some sports retailers and the stagnation of product innovation, the development of sports and leisure industry may slow down.

"In general, the whole industry is taking a break," Nikic said.

This resulted in Nikic reducing the annual profit forecast for Nike, Lululemon and Under Armour, in which Nikic's prediction of Under Armour was lower than the market average performance, and the company faced more problems.

Deutsche Bank (Deutsche Bank) lowered its rating of Under Armour from "holding" to "selling" in July. Less than a week later, Under Armour lowered its annual forecast.

As of the second quarter of fiscal year 2017, Under Armour has suffered a two consecutive quarterly loss.

(see the report: brand lacks clear positioning? Under Armour has suffered two consecutive quarterly losses, restructuring and layoff 2%)

Nikic explained that according to the survey results, Under Armour is the main source.

It is still in the mire of the US retail market and relies heavily on sales of sports equipment.

Compared with Nike and Lululemon, from the perspective of sales of sports shoes, the company has a higher rate of customer churn.

Last year, the industry showed weakness. The growth rate of Under Armour also slowed to 6%, the lowest level since 2010. Nikic expects that sales trend will continue to deteriorate this year and will continue until 2018.

As for the Nike company, Nikic said the company's latest Vapormax sneakers have not been on the upsurge, and the recent cooperation with Amazon may have a certain impact on the retail business of the brand.

Nikic said: "if Nike sells high-end sports shoes directly through Amazon, the impact on its retail industry will be even higher."

He pointed out that in a survey of more than 550 young men, 40% expressed willingness to buy high-end sports shoes in Amazon.

At present, Nike sells only mass products with a retail price of less than $90 only in Amazon.

Nikic thinks that Lululemon may perform better in the future among the three brands, but he points out that its positive financial situation is entirely driven by the increase in the past year, and the flow of Lululemon stores has always been unsatisfactory. Therefore, when the company can not maintain high prices, it will face greater risks.

Lululemon announced its second quarter results in August: net profit decreased by 10% compared to the same period last year, net sales grew 13% year-on-year, and same store sales grew 7% year on year.

Adidas is considered to be the highlight of the industry, but Nikic points out that its business is driven by fashion products rather than functional products.

"In the past few years, the sports industry has been able to avoid problems faced by other retail industries, such as less market traffic and strong promotions, but the demand for sports products has fallen, and the sports industry needs to face these problems," Nikic concluded.

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