Nike'S Share Price Hit A New High. Can Taobo International Succeed

For a listed company, it is very important to choose the auspicious day for listing. Taobo International was listed on the Hong Kong Stock Exchange on October 10, following the Hong Kong holiday of the 70th anniversary of the National Day. At the same time, just last two weeks, Nike just released its beautiful first quarterly report of fiscal year 2020, and its share price hit a record high. The first day of Taobo International's listing did not disappoint the public's expectations, and the closing price of the day rose as high as 8.82%.

　 Nike Greater China's beautiful financial report or guide Taobo's performance

Tauber International has cooperated with Nike for 20 years, and is the second largest retail partner and customer of Nike in the world. At the same time, the Chinese market is the fastest growing regional market for Nike's revenue in the first quarter of fiscal year 2020 (three months as of August 31, 2019), which undoubtedly plays a compass role in the performance of Taobo International in the second half of the year.

According to the disclosure of Nike's financial report, in the three months ended August 31, 2019, Nike's global revenue increased by 7.2% year on year to US $10.66 billion, of which the revenue in Greater China reached US $1.679 billion, with a year-on-year growth rate of 22%, far exceeding the revenue growth of 4% in North America, 6% in Europe, the Middle East and Africa, and 6% in Asia Pacific and Latin America. If the exchange factor is excluded, Nike's revenue growth in Greater China is as high as 27%.

In the three months ended August 31, 2019, Nike's profit before interest and tax in Greater China reached $669 million, with a year-on-year growth rate of 33%, which is also far ahead of other regional markets.

Nike executives said in the conference call, "As I predicted before, 'Nike is a Chinese brand,' and the result proved that it is true. For five years, we have achieved double-digit growth in every quarter of Greater China." Nike said that as a key partner of Nike's retail network, We will work with them to further promote the integration of online and online sales models.

It can be said that Nike attaches more importance to the Chinese market with sustained and rapid growth in performance. The development of the Chinese market needs the cooperation of powerful dealers, which saves huge cost investment compared with self support. At the same time, we have been deeply engaged in the Chinese market for many years. As a member of Belle International, Taobo International also knows more about the Chinese market.

Taobo International is currently the largest sports shoes and clothing retailer in China, with a market share of 15.9%. The company's main brands are Nike and Adidas. As of February 28, 2019, the sales revenue of major brands accounted for 87.4% of the total sales revenue.

The excellent performance of Greater China in the quarterly report of Nike from May 1 to August 31, 2019 undoubtedly provides guidance for the future performance of Taupo International, and also stabilizes the future expectations of investors.

China's sports shoes and clothing market is growing rapidly

The quarterly report of Nike, the world's largest sports brand, reflects the optimistic trend of the global sports shoes market, and also confirms from one side that China is a large regional market with the fastest growth rate in the global sports shoes market. Benefiting from China's emphasis on national fitness and the determination of a number of sports industry policy development goals, the scale of the national sports industry will reach 3 trillion yuan by 2020, and is expected to exceed 5 trillion yuan by 2025.

It can be said that under the trend of rapid development of the global sports industry, the trend of social development where people pay more attention to health, and the trend of China's increasing policy support for the sports industry, these three trends have promoted China's sports industry to move forward at a very fast pace.

According to Sullivan's survey report, the consumption of China's sports related goods market and sports shoes market was 277.7 billion yuan in 2014, and 405 billion yuan in 2018, with a four-year compound growth rate of 9.9%. It is expected to reach 610.1 billion yuan by 2023, and a five-year compound growth rate of 8.5%.

China's sports shoes and clothing market, as the sub category with the highest proportion by consumption in China's sports related goods market, is growing faster than the overall market. Its consumption in 2014 was 145.5 billion yuan, and increased to 235.7 billion yuan in 2018, with a four-year compound growth rate of 12.8%. It is expected to reach 392.3 billion yuan by 2023, and a five-year compound growth rate of 10.7%. Its share in the total consumption of China's sports related goods market also rose from 52.4% in 2014 to 58.2% in 2018, and is expected to reach 64.3% by 2023.

Driven by the growth trend of the three major industries, Taupo International, as the largest sports shoes and clothing retailer in China, will obtain stable support for long-term performance growth.

　　 The advantages of high-end products are becoming more obvious

From the sales statistics of the Chinese sports shoes market in the past four years, we found that there have been some new changes in this huge and growing market, and the medium and high-end products recognized by the market have a faster growth rate.

According to ECdateaway data, the year-on-year growth rate of China's sneaker sales from 2017 to the first eight months of 2019 was 24.8%, 20.1% and 34.5% respectively. From January to April 2019, China's sneaker sales increased significantly, but in May, June and July, we can see that the growth rate is slowing down significantly.

The same change is more obvious in the sales of sports shoes. In May, June and July 2019, the sales volume of sports shoes was 34028100 pairs, which was less than 1% higher than the 33698800 pairs in the same period of 2018.

However, we have seen a different picture in the change of the average sales price of sports shoes in the domestic market. Compared with the slow increase in the average sales price of sports shoes in 2017 and 2018, the average sales price growth of sports shoes in the first eight months of 2019 was significantly higher than that in the same period of 2017 and 2018, even in the five, six and seven months when the sales growth was almost stagnant. As a result, the sales of sports shoes in May, June and July of 2019 increased by 10.6% year on year even though the sales growth almost stagnated.

After 2019, the consumption upgrade trend in China's sports shoes market is obvious. In order to obtain a higher wearing experience, consumers are willing to pay a higher purchase price for sports shoes. This trend has remained even in the months when sales growth has almost stagnated.

Excellent brand recognition, fashionable design, comfortable wearing experience and functional sports shoes are favored by more and more consumers. This constitutes an insurmountable moat for latecomers in the domestic sports shoes and clothing industry.

According to the public information of Tauber International, in addition to the cooperation with Nike and Adidas, the company also has nine partners, including Puma, Converse, Arthur, Otsuka Tiger, Skycar, Reebok, and the brands of Weifu Group (Vans, The North Face, Timberland). These first tier international brands cover sports and sports fashion. The high-end positioning is more in line with consumer preferences and the general direction of the industry for consumption upgrading.

According to the U.S. footwear consumption market report released by NPD Group for the 12 months ended August 2019, the category with the fastest growth rate during the period was sports and leisure shoes, whose sales growth rate reached 7% year on year. In contrast, sales of fashion shoes, including high-heeled shoes, fell 5% year on year, and sales of professional performance sports shoes fell 7%. This may be worthy of reference for the future development of the domestic shoe market, and Taobo International, whose brand camp covers many first-line international fashion sports brands, will also benefit from it.