As China stumbles, these consumer companies are bucking the trend
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Consumer demand has been lackluster for some time in China, as evidenced by Saturday’s lower-than-expected retail sales for August and sub-5% gross domestic product growth for the second quarter.
Still, some consumer companies are posting solid gains even amid slowing growth momentum in the world’s second-largest economy.
Walmart’s (NYSE:WMT) Sam Club membership warehouse club unit saw “double-digit sales growth, along with “strong membership trends,” Chief Executive Doug McMillon said on an August 15 earnings call to discuss the retail giant’s fiscal Q2 results.
“We continue to gain market share, including in general merchandise, and transaction counts, and unit volume are up across markets,” he added.
Finance chief John David Rainey said membership income for the business rose 26% in the quarter ended July 26.
For the quarter, Walmart saw a 13.8% gain in sales across its businesses in China to $4.6B.
Lululemon Athletica (NASDAQ:LULU) said late last month its net revenue in China jump 34% to $314.2M in its fiscal Q2 ended July 28.
“In China mainland, our business remained robust in the second quarter as we continued to bring new guests into the brand through our stores and multiple e-commerce platform,” CEO Calvin McDonald said on an August 29 earnings call.
Chief Financial Officer Meghan Frank said on the call that most of the athletic apparel maker’s planned 30 international stores this year will be in China.
Amer Sports (NYSE:AS) said its Q2 revenue surged 54% in China to $289M.
Chief Executive James Zheng on an earnings call on August 20 credited the company’s success in the country to the “very strong” outdoor trend that is appealing to younger as well as female customers, adding that the company is seeing “more luxury shoppers.”
“The China consumer landscape today has evolved into a market of winners and losers, with some brands doing extremely well and others underperforming,” he said on the call. “Our still small specialized brands with deep expertise and high quality and performance resonate strongly with Chinese shoppers.”
Deckers Brands (NYSE:DECK) said it had “meaningful” growth in China in its fiscal Q1 ended June 30, then-Chief Commercial Officer Stefano Caroti said on a July 25 earnings call. (Caroti has since become CEO.)
Finance Chief Steve Fasching said the footwear and apparel maker will focus on the Chinese market. “And there, you’ll see us being more aggressive with like a retail build-out,” he said on the call.
He said its HOKA brand has more stores in China than any other country. Then-CEO Dave Powers said the company was looking for a HOKA flagship store in China. (The company has a flagship store in Hong Kong.)
Athletic apparel company On Holding (NYSE:ONON) said its Q2 sales soared 73.7% in the Asia-Pacific region to 59.2M Swiss francs ($69.7M).
Spokesman Jerrit Peter said on an earnings call on August 13 that the company added 25 stores in China over the past year.
On the other hand, Nike (NYSE:NKE) has not seen the success of the other companies. Its fiscal Q4 revenue for the three months ended May 31 rose just 7% to $1.86 billion.
Chief Financial Officer Matthew Friend said on a June 27 earnings call that the market in China was “highly promotional, and we continue to manage both Nike and partner inventory carefully,” adding that the athletic apparel giant remained confident of its long-term competitive position in the country.
The following are some China-focused assets of interest:
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