By Park Ji-won
Nike and Fila, two of the world's leading sportswear brands, saw poor sales in the Korean market last year, in contrast to rivals that had steady growth in the same period.
Analysts said Nike's poor performance may have been due to bad decisions about its product lineups and the rising number of fast fashion brands.
Nike, which has become a leading sporting goods brand in Korea since it first arrived here in 1986, posted only 63 billion won in sales between June 2012 and July 2013, according to data from the Financial Supervisory Service.
This is an 89-percent decrease from a year ago and the first big downturn for the company in recent years.
A Nike official declined to comment on the company's sales performance, saying it never provided any information regarding the issue to the public.
Analyst Park Hyun-jin at Dongbu Securities said Nike's problem was that its product lineups didn't make an impression on customers. Park added that it was also hit by the entry of fast fashion brands such as Zara, H&M and Uniqlo, which have the strongest brand identities among specialty apparel brands.
"Only fashion brands that have distinctive identities can survive in this era. Recently, the rising number of fast fashion brands have threatened the existence of leading brands," Park said.
Other unfortunate events may have contributed to Nike's poor sales. In October, Nike was ordered to pay some 661 million won ($634,975) to its business partner Orient Golf, after being found guilty of breaking its contract with the golf product retailer for its poor sales of Nike golf products.
According to the contract between the two companies, if the retailer is found to have a poor sales ability, Nike could end its contract with the retailer after three months.
As a result of its poor sales last year, Nike cut the number of its employees. An industry source who declined to be named said there will be a mass layoff in Nike's marketing department at the end of this year.
Fila, a global sportswear firm headquartered in Seoul, also performed poorly last year in terms of sales and operating profit.
It recorded sales of 415 billion won in 2013, down 7.4 percent from a year earlier, and an operating profit of 24 billion won in the same period, down 25 percent year-on-year.
"The main reason for our sluggish sales came from the outside ― the sluggish consumer demand," official Byun Jae-woong at Fila said.
However, according to some consumers, the company's weak brand image failed to attract its target market here, people in their 20s and 30s.
"Fila doesn't have a strong image here, and my friends are not interested in it," office worker Kim Gyeong-in, 27, said.
Critics point out that Fila has no room to grow in the Korean market especially as it pays most of its attention to the United States market.
Fila Korea took over Acushnet, one of the world's largest golf equipment makers, in cooperation with Mirae Asset in July, 2011. It paid additional $34 million in July last year to raise its stake in Acushnet to 47.10 percent. This payment made a significant dent to the firm's finances.
The two firms' poor performances are in contrast to those of other major sporting goods companies that performed well last year.
Adidas Korea, the Korean unit of the Germany-based multinational brand, recorded 774 billion won in sales in 2013, up 12.9 percent year-on-year, and posted 106 billion won in operating profit, up 17.7 percent from a year ago.
Asics Korea, the Korean unit of the Japanese sportswear firm, has also been performing well in recent years. It posted 214 billion won in sales in 2013, up 6 percent year-on-year, and recorded 9 billion won in operating profit, up 25 percent from a year ago.