Nike/China: consumer market is yet to fully open

{"text":[[{"start":12.62,"text":"China’s decision to announce a significant easing of Covid-19 restrictions will cheer multinationals. "},{"start":18.549,"text":"The decision to cut quarantine times for inbound travel by half will come as a relief to residents and business groups. "},{"start":24.829,"text":"Just don’t take this change as a sign that China is close to returning to normal. "}],[{"start":29.93,"text":"Companies that trumpet confidence in a quick rebound for the world’s largest consumer market are being overly optimistic. "},{"start":36.297,"text":"China’s determination to stick to its zero-Covid policy means mass testing, quarantines and lockdown measures will continue. "},{"start":43.339,"text":"Earlier this month, multiple neighbourhoods in Shanghai were placed under lockdown just one day after city-wide restrictions were lifted. "}],[{"start":51.42,"text":"Downbeat earnings guidance issued by sportswear giant Nike is likely to be replicated by more consumer companies in the weeks to come. "}],[{"start":59.56,"text":"Nike shed nearly $10bn in market value on Tuesday following first-quarter and full-year forecasts that came below expectations. "},{"start":67.677,"text":"Although Greater China accounted for just under a fifth of Nike’s sales in 2020, the country is one of the company’s most profitable markets, generating almost half of group earnings before interest and taxes that year. "}],[{"start":79.61,"text":"China’s lockdowns have hit more than just Nike’s sales in the country. "},{"start":83.689,"text":"These fell 19 per cent in the fiscal fourth quarter that ended on May 31, while ebit from the region slumped 55 per cent. "},{"start":90.782,"text":"Factory and warehouse shutdowns have also created supply chain issues in other markets, pressuring margins and driving up costs. "}],[{"start":98.58,"text":"For Nike, the problems in China exacerbate a host of existing issues. "},{"start":103.27199999999999,"text":"These range from the strong dollar to higher input and freight costs and the fear of a looming recession in the US. "},{"start":109.214,"text":"This is reflected in the 36 per cent drop in the share price this year. "},{"start":113.432,"text":"China’s middle-class consumers will remain an important source of growth for the world’s consumer goods companies. "},{"start":119.09899999999999,"text":"But recovery will take years, not months. "}],[{"start":121.9,"text":""}]],"url":"https://creatives.ftacademy.cn/album/75693-1656469107.mp3"}