Slowing consumption in China puts pressure on U.S. profits again | Wilnesh News

from apple arrive StarbucksU.S. consumer brands reported another quarter of declining sales in China.

Revenues have fallen in China, a key market for U.S. companies, amid tepid consumer spending and growing competition from local brands.

Apple last week report Sales in Greater China fell slightly to $15.03 billion in the three months ended September 28, down from $15.08 billion in the same period last year. These figures include sales in mainland China, Hong Kong, Macau and Taiwan.

Chief Executive Tim Cook attributed “flat” results to improving foreign exchange during an earnings call and pointed to Kantar data showing Apple has two of the best-selling smartphones in Chinese cities.

The quarterly sales decline brought Apple’s China revenue to 15.8% of total net sales from 16.9% in the same period last year.

The iPhone maker’s sales are under pressure due to Huawei’s resurgence in China’s smartphone market.

Starbucks faces more pressure Chinese and foreign brands have proliferated, vying for the local market, often selling coffee at half price.

American coffee chain explain Its same-store sales in China fell 14% in the three months ended September 29, and consumers spent 8% less on average per order.

Chief Executive Brian Niccol said on an earnings call last week that sales “were weighed down by increased competition and a soft macro environment that impacted consumer spending,” according to FactSet transcripts.

He said he needs to spend more time in China to understand local business. “All signs are that the competitive environment is extreme, the macro environment is difficult, and we need to figure out how we grow in the market now and in the future,” Nicol said. “At the same time, we will continue to explore strategic partnerships that can help us grow long-term.”

China’s share of Starbucks revenue fell to 8.6% in the most recent quarter from 9% a year earlier.

American sportswear giant Nike Represents Greater China revenue for the quarter ended August 31 For the full year, it fell 4% to 1.67 billion yuan.

“Nike is not immune to the challenges facing consumers in Greater China today,” Nike Chief Financial Officer Matthew Friend told analysts on an Oct. 1 conference call, according to FactSet records. He said retail sales fell short of the company’s expectations, and Nike lowered its China business forecast for the rest of the year.

However, Nike’s reliance on revenue from China has increased. The region’s share of total revenue rose to 14.4% in the quarter from 13.4% in the same period last year.

In Europe, luxury giants LVMH We also feel the drag from the Chinese market. Asia revenue (excluding Japan) A year-on-year plunge of 16% In the third season. This was much higher than the 3% decline in overall revenue.

According to Refinitiv records, Chief Financial Officer Jean-Jacques Guiony said on October 16, “Today, consumer confidence in mainland China has returned to the lowest level in history reached during the COVID-19 epidemic.”

In the first three quarters of this year, sales in Asia excluding Japan accounted for 29% of LVMH’s total revenue, down from 32% in the same period in 2023.

Apple, Starbucks and Nike have all seen a decline in China’s share of total revenue compared to 2019, before the pandemic.

“What’s relatively unique about China is the partnerships and politics and how important they are and how companies are connected to China,” said Isaac Stone Fish, founder and chief executive of US consultancy Strategy Risks. .

In late September, the company released an analysis report on the U.S. companies that have the greatest impact on Chinese business: Ford, Carrier, Apple, Tesla, Coca-Cola, Cummins, RTX Corporation, Honeywell, Walt Disney and Caterpillar Le.

“It depends on how risk-averse investors are, but people need to understand that there is a real possibility that tensions between the United States and China will increase, or even that China could invade Taiwan or impose a blockade, disrupting global supply,” Fish said. Really distorting today’s market.

Musk’s Tesla More than a fifth of income still depends on China. That share grew to 22.5% in the quarter ended Sept. 30 as the electric car company’s sales in China grew. Climb It increased nearly 13% year-on-year to US$5.67 billion.

Tesla’s Model Y is Chinese best selling Although electric cars will be launched in September Increasing competition from local automakers.

Adidas‘Greater China sales Increase Growth of 8.7% to 946 million euros ($1.03 billion). This business accounted for 14.7% of Adidas’ total revenue of 6.44 billion euros this quarter.

During an Oct. 29 earnings call, CEO Bjørn Gulden attributed the stronger-than-expected growth in the third quarter in part to “strong underlying growth in Greater China,” and said Adidas is developing products developed and sourced in China to Compete locally. That’s according to Refinitiv’s transcript.

lululemonThe next company to report earnings on December 5 has also bucked the trend and released a report on Mainland China revenue surges 34% For the quarter ended July 28.