After "weak results on the home court, Nike is playing defense in North America," according to Miriam Gottfried of the WALL STREET JOURNAL. The sportswear brand’s revenues in the region "decelerated during its fiscal fourth quarter ended May, coming in flat year over year." Even after "adjusting for a timing shift from last year’s West Coast port delays," that was still a slowdown from the previous quarter. Increased competition in the basketball segment from rival Under Armour "was partially responsible." Accelerating same-store sales reported recently by Foot Locker and Dick’s Sporting Goods "bode well for Nike’s North American business." The two retailers purchased 72% and 20% of merchandise, respectively, from the brand in fiscal '15. Analysts expected Nike on Tuesday to report fiscal first-quarter earnings of 56 cents a share on revenue of $8.9B. That compares with per-share earnings of 67 cents on revenue of $8.4B in the year-ago quarter. Nike itself said its gross margin would fall by 1 percentage point in the quarter, "driven mostly by currency effects." Meanwhile, Nike is working to cut costs. In August it announced a partnership with private-equity firm Apollo Global Management. As part of the agreement, a new company was formed to purchase Nike’s existing apparel suppliers in North and Central America. Granted, Nike’s "futures orders," which reflect products scheduled for delivery, "tend to decelerate after the Olympics." Stronger competition from Under Armour, adidas and Puma "also remains a risk." But Nike is "well aware by now" of the need to develop new products to maintain and grow its share (WSJ, 9/26).
