Nike Shares Drop After Tepid Earnings Forecast
March 22 2017 - 11:36AM
Dow Jones News
By Sara Germano
Shares of Nike Inc. fell Wednesday after the world's largest
sportswear maker gave a tepid outlook for sales growth.
Nike late Tuesday posted a jump in quarterly profit but the
company faces stiffer competition and a changing retail landscape.
Its shares were down 5.8% in midmorning trading Wednesday, at
$54.62.
Nike executives said the shift to online shopping has made
traditional brick-and-mortar retailing more difficult. "It's
driving a more promotional environment in the near term," Chief
Executive Mark Parker said on a conference call.
The world's largest sportswear maker said it expects to tighten
the supply of products it releases in North America, the largest
sporting-goods market. Sales in its home market rose 3% in the
quarter ended Feb. 28.
Nike's world-wide futures orders, largely a gauge of wholesale
orders scheduled to ship in the next six months, fell 4%, and the
company forecast mid-single-digit sales growth for its current
quarter, slightly below results reported Tuesday.
Mr. Parker emphasized the company's ongoing efforts to improve
sales directly to consumers, create and ship products more
efficiently, and develop more technologically advanced
products.
The company is facing competition from a resurgent Adidas AG,
the German sportswear maker which earlier this month reported
stronger sales growth and profitability, in part due to refocusing
its efforts on the key North American market.
Nike's results were also hurt by a stronger U.S. dollar, and the
company anticipates that currency exchange rates will weigh on
results through the end of its next fiscal year.
Nike reported Tuesday a quarterly profit of $1.14 billion, or 68
cents a share, up from $950 million, or 55 cents a share, a year
earlier. Revenue increased 5% to $8.43 billion, falling short of
the $8.47 billion analysts expected. Excluding currency
fluctuations, revenue rose 7%.
Nike's stock dropped 19% last year, making it the biggest loser
in the Dow Jones Industrial Average. It was the stock's worst
one-year performance since the financial crisis, although shares
have regained some ground in 2017.
--Ezequiel Minaya contributed to this article.
Write to Sara Germano at sara.germano@wsj.com
(END) Dow Jones Newswires
March 22, 2017 11:21 ET (15:21 GMT)
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