Will Nike'S Price Rise Raise The Price Of Clothing Industry?

According to media reports, Nike The price of shoes and clothes will be raised by 5%~10%. This will be tested in the autumn of when the most expensive sports shoes are being sold at the estimated price of $315.

Yesterday (August 21st), one clothing Industry analysts told reporters that Nike's recent rise in raw material and spanportation costs has brought pressure on its profit growth. The aim of the price increase should be to increase profitability. Whether this approach will trigger a wave of price rises remains to be seen.

Nike faces pressure on cost and inventory

According to reports, Nike headquarters spokesman MaryRemuzzi said Nike is not blindly raising prices, "we are always trying to make use of new innovations and product performance to enhance product lines".

Reporters call Nike China Public Relations Department, but as of press time, no relevant person in charge.

This is not the first time that the price of Nike products has risen. In March last year, MaryRemuzzi said it would start raising prices globally for footwear and apparel products in the spring of 2012 to cope with rising oil, cotton and spanport costs.

Above Garment industry Analysts told reporters that in fact, Nike's profit margin has declined for the first time in several quarters in the past two years, and the rising cost of raw materials and spanportation has brought great pressure to its profit growth.

"But I think the cost of raw materials is very small compared with the selling price. The rise of costs is more reflected in human costs, marketing costs and R & D costs. Obviously, Nike raised the price this time in order to cope with the higher cost pressure and increase the profit margin. The analysts said.

Nike's earnings report showed that its net profit in the fourth quarter was US $549 million, down 7.6% from 594 million US dollars in the same period last year.

The company has said that the decline in profit is mainly due to the decline in profit margins, as well as the restructuring related expenses from Nike brand Western Europe Department, thus covering a wide range of revenue growth.

Not only that, reporters found that Nike is still facing more serious inventory pressure. By the end of 5 in 2012, Nike's inventory reached US $3 billion 350 million, an increase of 23.39% compared with 2 billion 715 million US dollars in the same period last year.

An independent fashion critic, Ma Gang, said in an interview with reporters that Nike's growth expectation for the Chinese market was high every year. According to this plan, there must be some problems in inventory.

Can the price rise smoothly to be tested in the market?

The aforementioned analyst told reporters that whether the price of Nike could rise smoothly has yet to be tested by the market. The main reason is that the overall sales situation of the sports brand is in the doldrums, and the economic downturn has brought down the overall consumption level. "The price is too high, and consumers are not willing to pay the bill."

Fourth quarter data show that Nike's sales in the Chinese market have declined. In the quarter, sales of products in the Greater China region, including footwear, clothing and accessories, amounted to $667 million, down 3.89% from the third quarter.

Last year, domestic brands Lining After announces the annual report, it has also indicated that due to the increase in wages and raw material costs, the average cost is expected to rise by 20%, and the price of products will increase by two digits.

However, as a leading brand of the first-line brand, will Nike's rise in price rise a new round of price surges?

Reporters learned that after 2008, the rapid expansion of sports brands, the increasingly brutal homogenization of competition, so that the second tier brands are facing great pressure. Wang Qian, the chief editor of the first textile network, said in an interview that the cost of manpower, the rising price of raw materials and the changes in the trade environment have made the business environment of clothing enterprises "sudden change" in the last two years.

"Generally speaking, consumers are not very sensitive to the uptrend of high-end brands like Nike. After the industry shuffle, Nike, ADI and so on have already drawn a certain distance from the low and medium market sports brand. It is more prudent to raise the price of the sports brand in the middle and low end market, because this may lead to the loss of consumers. The analysts said.