Nike, the number one global sports brand in the ‘King of Sneakers’, has finally unveiled its Korean performance.
Rumors abounded that it was generating trillions of sales in the Korean market, but for the first time since the establishment of Nike Korea in 2010, sales and profits were finally revealed.
According to the Financial Supervisory Service on the 21st, Nike Korea’s sales in 2020 were 1.45 trillion won, up 12.3% from the previous year.
Although the fashion industry has contracted in the aftermath of COVID-19, Nike has proven that it is a ‘windless zone’.
In the Korean market last year, Louis Vuitton Korea posted sales of 1.46.8 trillion won and Chanel Korea 929.6 billion won in sales.
Nike’s sales power, which sells popular sneakers and sportswear and limited edition sneakers, has overtaken leading global luxury brands.
However, it was found that the profit margin fell far short of that of luxury goods due to marketing expenses, SG&A expenses, and cost of sales.
Nike Korea’s operating profit was 29 billion won, down 25.4% from the previous year.
Although the cost of sales was high compared to sales, and SG&A expenses surged from 183.9 billion won in 2019 to 208.5 billion won in 2019, the operating profit decreased significantly.
As corporate tax expenses increased from 9.7 billion won to 34.2 billion won while operating profit decreased, the company recorded a net loss of 6 billion won and turned to the red.
In the case of Louis Vuitton Korea, sales last year stood at KRW 1.46.8 trillion, up 33.4% from KRW 784.6 billion in 2019.
Operating profit was 151.9 billion won, up 176.68% from 54.9 billion won in 2019.
Net profit jumped 284.2% to 70.3 billion won.
Chanel Korea’s sales in 2020 were 929.6 billion won, a decrease of 12.6% compared to 2019’s 1.63.9 trillion won due to a hit in duty-free shop sales.
Despite the decrease in sales, operating profit increased 34.4% year-on-year to 149.1 billion won and net profit increased 31.8% to 106.9 billion won.
Compared to Louis Vuitton and Chanel, which achieved operating profit of around 150 billion won, respectively, with sales of 1 trillion won and 900 billion won, Nike Korea’s operating profit is very poor compared to its sales volume.
Net income also recorded 30.6 billion won in 2019, but turned to a loss last year.
Meanwhile, Nike Korea Corporation was established in November 2010 and is 100% owned by Nike GmbH (based in Austria).
This is the first time Nike Korea has disclosed its domestic performance.
As external audit obligations are imposed on limited liability companies according to the amendment of the Foreign External Audit Act, foreign limited companies have also been disclosing audit reports from this year.
Accordingly, from this year, the results of foreign Korean subsidiaries under the veil of Louis Vuitton Korea, Chanel Korea, and Hermes Korea have been disclosed.