NKE Nike Inc

Broad-based demand for its athletic apparel, sneakers propelled sales 10% higher

By Khadeeja Safdar 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 26, 2018).

Nike Inc. posted a 10% increase in sales during the summer quarter, riding strong consumer spending in the U.S. and healthy demand outside its home market for the brand's sneakers and athletic apparel.

Chief Executive Mark Parker said in an earnings call on Tuesday that the growth was "broad-based," attributing the results to the company's efforts across product categories and in several markets across the globe.

Revenue in Nike's North American market, which accounts for about 40% of total sales, increased 6% to $4.1 billion for the first quarter ended August 31. The gains include a 5% increase in the footwear business and an 8% rise in apparel.

Shares of Nike declined about 2% in after-hours trading on Tuesday. The stock has gained more than 50% in the past year.

The sneaker giant, which has been expanding its e-commerce sales, said its efforts to reach customers through its own apps and stores paid off in the quarter. In the past year Nike has cut back the number of retailers it focuses on and started selling its goods through Amazon.com Inc.

Mr. Parker said the move to narrow the brand's focus on retailers like Nordstrom Inc. and Foot Locker Inc. is driving higher growth rates. He also highlighted a new Los Angeles store, which changes its products based on what's trending with shoppers in the local area.

The company said it has been successfully capitalizing on key moments in sports, noting that both teams in the World Cup final were sponsored by Nike.

Nike has battled Adidas AG and Under Armour Inc. for the attention of young shoppers in recent years. Earlier this month, the company ran an ad featuring NFL quarterback-turned-activist Colin Kaepernick, which divided American shoe buyers. After Mr. Kaepernick's involvement was revealed, some people defaced Nike gear and promised to boycott the company. But initial indicators showed a temporary rise in online purchases.

The latest quarter ended in August, before the ad was unveiled. After an initial 3% decline in shares following the campaign launch, investors have pushed Nike's stock to an all-time high.

On Tuesday, Mr. Parker said the campaign, which also featured other athletes including Serena Williams and Odell Beckham Jr., is "driving a real uptake, I think, in traffic and engagement, both socially as well as commercially."

Retailers from Walmart Inc. to Nordstrom Inc., have reported strong quarterly sales recently, buoyed by rising consumer confidence. But the booming economy hasn't lifted all brands. Gap Inc.'s namesake brand and L Brands Inc.'s Victoria's Secret both reported declining comparable sales in the latest quarter.

The Beaverton, Ore. -- based company reported net income of $1.1 billion on sales of $9.9 billion in the three months. During the quarter, the company also repurchased 17.8 million shares for approximately $1.4 billion.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

September 26, 2018 02:47 ET (06:47 GMT)

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