Nike shares fall on slower North American sales growth

March 22, 2019 | 15:48

(0) user say

Nike shares fell on lower sales growth in North America on Thursday (Mar 21) as the company returned to third-quarter profitability while touting new investments in e-commerce and women's athletics.

Nike shares fall on slower North American sales growth, AFP Photo/Drew Angerer

The sports giant scored profits of US$1.1 billion in the quarter ending Feb 28, compared with a US$921 million loss in the year-ago period due to a one-time tax cuts.

Revenues rose seven per cent to US$9.6 billion. Sales growth was led by China with 19 per cent, but increased in all regions.

But sales in North America rose seven percent, which was slower than the level in the second quarter and below leading forecasts.

Nike continued to boost spending on digital commerce through new mobile applications, enhanced customer memberships and loyalty programmes.

The initiatives are partly motivated by a commercial shakeout in the retail business that has derailed some chains that once sold the brand and sharpened the need for direct sales.

Chief Financial Officer Andy Campion told an analyst conference call that the investments stem from a belief that "from a long-term perspective, we see digital comprising the majority of our business."

Nike is also focusing marketing and product development dollars on female customers, unveiling a major "Dream Crazier" ad campaign narrated by Serena Williams that has been viewed nearly 8.7 million times on YouTube and has been most-ever-shared item on Instagram in North America, executives said.

Chief Executive Mark Parker said Nike's overall sales are still "under-indexed" to women and that the market offered "tremendous upside" worldwide, including in China for products such as running gear and sports bras.

Shares of North America fell 4.6 per cent to US$84 in after-hours trading.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional