Nike Sales Climb In Q2 Despite Another Quarter Of Declines In North America Market
Nike sales climbed in Q2, even as profit and revenue in North America "declined, as the sportswear maker attempted to sell more directly to consumers instead of through struggling sporting-goods chains and other intermediaries," according to Sara Germano of the WALL STREET JOURNAL. For the period ended Nov. 30, Nike’s profit fell 9% to $767M from $842M a year earlier. Revenue rose 5% to $8.6B, though sales in North America fell 5%, to $3.5B. During a "challenging year" for sportswear companies, Nike has "attempted to increase its direct and online sales to customers and lessen its reliance on retailers." It has also "contended with a resurgent rival" in Adidas. On a call with analysts on Thursday, Nike execs "pointed out some sales initiatives in the works, including one with the fashion startup Stitch Fix." Nike Brand President Trevor Edwards said that the company also will "restrict some Jordan sneakers in the marketplace to preserve their exclusivity." Nike’s Q2 results come "about two months after it said it would shake up its relationship with retailers, focusing on just 40 of its nearly 30,000 accounts in the coming years as it devotes more to online and direct sales." Over the summer, Nike "agreed to sell products through Amazon.com" after holding out for years. Nike Chair, President & CEO Mark Parker said Thursday that the company was "extending that pilot program with Amazon" (WALL STREET JOURNAL, 12/22). At presstime, Nike shares were trading at $62.80, down 3% from the close of business on Thursday (THE DAILY).
BETTER ON THE ROAD: REUTERS' Gayathree Ganesan noted a "fall in demand for its footwear and sports equipment in North America" led Nike to a 5% decline in revenue from the market, but it was "more than offset by increased demand from Greater China and European regions." Q2 revenue from Greater China rose 16% and Europe rose 19% (REUTERS, 12/21). Bloomberg analyst Chen Grazutis said, "It looks like a tale of two cities. International is very strong, and the U.S. is still weaker than a lot of people expected." Parker said there was "underlying momentum" in Nike's domestic business during Q2 and added the lineup of new products for the next six months is "as strong as it's ever been." BLOOMBERG NEWS' Matthew Townsend noted the decline in North America "marked the second straight" quarter with a drop (BLOOMBERG NEWS, 12/21).