Nike Posts Sales Gain but Says Growth Will Slow -- WSJ
March 22 2019 - 3:02AM
Dow Jones News
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 (March 22, 2019).
Nike Inc. said strong consumer demand in the U.S. and China
helped the company sell more products at full price and through its
own apps and websites in the holiday quarter, but it cautioned that
sales growth would slow in the current quarter.
The sneaker and sportswear giant reported that revenue rose 7%
in the third quarter ended Feb. 28, or 11% excluding currency
swings. The company had a 7% gain in North America and a 19% jump
in the Greater China market. Both markets, however, generated
slower growth than they did in the quarter ended Nov. 30.
On a conference call Thursday, executives said they expect
revenue to rise by a high-single-digit percentage in the company's
fiscal fourth quarter. Currency pressures will reduce the growth by
6 percentage points, leaving the company with a low-single-digit
gain from a year ago, they said.
Shares of Nike, which have rallied in recent months, fell about
4% to $84.30 in after-hours trading on Thursday.
Chief Executive Mark Parker said Nike's digital business grew
36%, on a constant-currency basis, in the quarter and reached $1
billion in revenue for the first time.
The company has been adding new features to its apps to offer
more personalized products and reward its best customers, he said.
"There are teams all over Nike piloting new ideas, improving our
concepts."
The company recently opened a six-story flagship store on Fifth
Avenue in Manhattan, where shoppers can scan product bar codes or
request to try on clothes using their smartphones. The product
selection on one of the floors is also informed by online purchase
data in the local area.
In China, executives said demand has been strong as running and
other sports become a bigger part of life for consumers there.
"We have great momentum in China, but we are still far from
realizing the long-term opportunity in this market," said Andrew
Campion, Nike's chief financial officer.
The earnings report comes about a month after a Nike sneaker
worn by Duke University basketball star Zion Williamson, who is
expected to be the top pick in this summer's NBA draft, ripped open
during a high-profile game. Nike's stock dropped on the news but
has since rebounded.
Demand for footwear has been strong in the U.S. according to the
latest results from key Nike retailers such as Foot Locker Inc. and
Dick's Sporting Goods Inc. Last week, rival Adidas AG reported a
15% jump in its North America business in 2018, but warned a
supply-chain bottleneck would prevent it from meeting demand for
its products in the coming months.
For the quarter, Nike reported net income of $1.1 billion on
total sales of $9.61 billion. A year ago, it had a quarterly loss
of $921 million, due to changes to U.S. tax laws, and $8.98 billion
of revenue.
Mr. Parker said the women's sneaker business is growing faster
than men's, which is an opportunity for his company.
"We see women embracing the sneaker culture more and more every
day, so we're scaling up popular models and creating new models for
women specifically," he said.
The CEO also said Nike would be introducing more sneakers that
cost less than $100 later this year. "We have to be competitive at
every level," he said, not just at that price point in North
America but in other markets. "I think there's a great opportunity
for us."
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
March 22, 2019 02:47 ET (06:47 GMT)
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