Nike Sales Climb, Despite Declines in North America -- Update
December 21 2017 - 6:56PM
Dow Jones News
By Sara Germano
Nike Inc. sales climbed in its most recent quarter even as
profit and revenue in its home market declined, as the sportswear
maker attempted to sell more directly to consumers instead of
through struggling sporting-goods chains and other
intermediaries.
For the period ended Nov. 30, Nike's profit fell 9%, to $767
million, or 46 cents a share, from $842 million, or 50 cents a
share, a year earlier. Revenue rose 5%, to $8.6 billion, though
sales in North America fell 5%, to $3.5 billion.
Analysts polled by FactSet expected profit of $665 million, or
40 cents a share, on sales of $8.4 billion.
During a challenging year for sportswear companies, Nike has
attempted to increase its direct and online sales to customers and
lessen its reliance on retailers. It has also contended with a
resurgent rival, Adidas AG, whose sales have climbed in North
America.
On a call with analysts on Thursday, Nike executives pointed out
some sales initiatives in the works, including one with the fashion
startup Stitch Fix Inc. Nike Brand President Trevor Edwards said
the company will also restrict some Jordan sneakers in the
marketplace to preserve their exclusivity.
Nike's results come about two months after it said it would
shake up its relationship with retailers, focusing on just 40 of
its nearly 30,000 accounts in the coming years as it devotes more
to online and direct sales. Some of the chains that sold Nike
products, such as the Sports Authority, have liquidated in recent
years. Just in the past few months, Shiekh Shoes and Sports Zone,
two regional chains that derived most of their sales from Nike,
have filed for chapter 11 bankruptcy.
Over the summer, Nike agreed to sell products through Amazon.com
Inc. after holding out for years, a sign of the online retailer's
growing importance to big brands. Nike Chief Executive Mark Parker
said Thursday that the company was extending that pilot program
with Amazon, adding that "the important part is that we enhance the
brand through better presentation and then the sharing of data so
we can better serve consumers."
Selling directly to consumers has posed its own challenges.
Nike's website suffered technical problems on Black Friday, and
last month scores of customers complained on social media that they
weren't able to buy shoes from Nike's "The Ten" collection, a
collaboration with designer Virgil Abloh.
Danny Gallegos, a 26-year-old social-media marketer in Miami,
said he tried shopping via Nike's SNKRS app nearly a dozen times
this year and has yet to succeed in buying shoes. He said he has
had better luck with an Adidas app, Adidas Confirmed, where he
scored one pair of sneakers this year.
"My biggest question is whether or not it's a servers issue," he
said. "If so, shouldn't multibillion-dollar companies be able to
buy their way into a fix for that? What's the holdup?"
Nike shares fell 1.4% after hours.
Finance chief Andrew Campion said the company expects revenue
growth for the current period to be roughly in the mid-single-digit
percentage range while promotions in the U.S. market will continue
to weigh on margins.
--Lillian Rizzo and Katy Stech Ferek contributed to this
article.
Write to Sara Germano at sara.germano@wsj.com
(END) Dow Jones Newswires
December 21, 2017 18:41 ET (23:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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