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Volume 26 No. 61
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Strong Demand Boosts Nike Sales In Final Quarter Of Fiscal Year

Nike in its latest quarter saw a sales increase that was "boosted by strong demand in both the U.S. and China," which led to total sales rising by 4% to $10.18B, according to Safdar & Thomas of the WALL STREET JOURNAL. For Nike's Q4, which ended May 31, revenue in the North American market, which "accounts for the majority of total sales," rose 7% to $4.17B, while sales in China climbed 16% to $1.7B. Nike reported a profit of $989M, compared with $1.14B the same quarter a year ago. Profits were "hurt by spending on new technology and a higher tax rate than a year ago." For the new FY, the company "reiterated its previous financial forecasts, which call for revenue, excluding currency swings, to rise by a high-single-digit percentage." On that basis, revenue rose 7.5% overall in FY '18-19 (WALL STREET JOURNAL, 6/28). CNBC’s Sara Eisen said Nike "spends on athletes and celebrities and World Cups and they’re also spending to shift their business more to direct-to-consumer." She added the Nike execs on yesterday's earnings call were "talking that growth up, especially in their sneakers app which has exploded in just two years, of why they need to make those investments" (“Fast Money,” CNBC, 6/27).

NO TROUBLE IN CHINA: CNBC’s Brian Sullivan noted Nike yesterday stated, "China is doing just fine, thank you very much. Sales there and here were higher last quarter and this is key. On their conference call, CEO Mark Parker said the trade fight between America and China has not impacted their business” (“Worldwide Exchange,” CNBC, 6/28). Guggenheim Retail Analyst Robert Drbul said Nike has “proven over the years their ability to be quite agile and flexible in terms of any global environment.” The China trade tensions were a “concern and they did more than really address what those concerns were in terms of their outlook and their performance.” Drbul: “You think about how they plan their business over the longer term, they’re going to move forward and keep their head down and keep really pressing and they’re not going to let the strength of the dollar really impact how they view the longer term positioning of the company" (“Squawk on the Street,” CNBC, 6/28).

DEEPER LOOK: WOMEN'S WEAR DAILY's Kathryn Hopkins noted revenues for the Nike brand were $9.7B, up 10%, "driven by growth across Nike Direct and wholesale, key categories including sportswear, Jordan and basketball, and continued growth across footwear and apparel." Revenues for Nike's Converse brand were flat at $491M, "mainly driven by double-digit growth in Asia and digital, which was offset with declines in the U.S. and Europe" (WWD.com, 6/27). In Portland, Matthew Kish noted shares "dipped after the company reported earnings" yesterday, then recovered after Nike CFO Andy Campion announced the sales forecast. Campion said that the company is "delivering on promises to reshape the business as a more digital-first company that can more quickly get products in the hands of consumers." He added that Nike "believes digital sales will eventually account for the majority of its sales" (BIZJOURNALS.com, 6/27). At presstime, shares of Nike were trading at $82.76, down 1.08% (THE DAILY).