Nike yesterday "handily beat analysts' expectations," as the company's total sales jumped 6% to $8.2B and its Q2 earnings increased 7% to $842M, 50 cents a share, according to Jeff Manning of the Portland OREGONIAN. Nike President, Chair & CEO Mark Parker "conceded in his remarks to stock analysts that the company suffered a few missteps in the last 12 months," including a couple of key basketball shoes that "sold poorly." However, Parker added that the company has "worked through those issues ... and is positioned to continue its streak of '28 consecutive quarters at an unrivaled scale.'" After a "weak 12 months, Nike's key basketball operation is showing new life." Nike's LeBron James and Kevin Durant signature shoes "met indifferent consumer reaction last year." But Nike Brand President Trevor Edwards said that this year the company "unveiled updated versions with significantly smaller pricetags that have sold briskly." Manning notes it "wasn't all good news" as inventories increased in Q2 at 9%. But Nike "attributed the rise in part to its own burgeoning 'direct-to-consumer' sales operation on the Web and through company stores" (Portland OREGONIAN, 12/21). The WALL STREET JOURNAL's Sara Germano writes Nike in recent months has "taken steps to drive more direct sales, improve its online sales apps and adjust pricing on some of its marquee products, such as its signature basketball shoes." Still, the company has been "dogged by concerns" that rivals adidas and Under Armour are "sapping demand for its products." Parker said, "There’s a misconception that growth in our lifestyle business comes at the expense of growth in our performance business. The reality is they fuel each other" (WALL STREET JOURNAL, 12/21). In Portland, Matthew Kish noted for the first time, futures, a Nike metric that tracks demand, was "not disclosed on the company's quarterly earnings release" (BIZJOURNALS.com, 12/20). At presstime, Nike shares were trading at $51.72, down .07% from the close of business yesterday (THE DAILY).
STEP YOUR GAME UP: Barclays Retail Analyst Matt McClintock said Nike views competition as something that "makes everyone elevate their game, and its one reason why they’ve gone back to the drawing board" and focused more on their signature basketball shoes. Despite some challenges with the James and Durant shoes, Nike has "gone back and what they've seen as a result of those reiterations is they’ve seen an improvement in sell-through." McClintock: "What they’re seeing is more and more interest in that. And then you combine that with the launch of an entirely new signature basketball athlete in Paul George, you actually have what they believe is enthusiasm for what we can see is an improvement, a meaningful acceleration in the basketball business as we go into the back half of this year" ("Squawk Box,” CNBC, 12/21).
