Nike: booming China makes up for lackluster U.S.
Nike’s difficulties in the U.S. continue – but, thanks to strong international performance (particularly in China), the iconic sporting apparel giant has delivered a beat on its earnings. The company released first quarter earnings for fiscal 2018 earlier this week, reporting earnings of 57 cents per share – a significant beat against analysts’ expectations of 48 cents per share. However, the company was less successful in regards to revenue: Nike collected $9.07 billion against estimates of $9.08 billion.
However, this isn’t the whole story. While the company’s revenue was pretty much flat against the same period a year ago, Nike as a brand has strengthened. Stripping out currency effects, sales were up 2% for Nike the brand. However, the company’s results include a dragging down from its Converse brand, which saw sales decline by 16% - the majority of which was focused on North America.
Nike’s CEO, mark Parker, released a statement that was big on promises for the company’s future over the next nine months. He said:
“This quarter, we captured near-term opportunities through our new Consumer Direct Offense. Looking ahead to the rest of fiscal 2018, we will ignite NIKE's next horizon of global growth through the strength of our brand, the power of our innovative products and the most personal, digitally-connected experiences in our industry."
Broken down by product, Nike’s sales are largely what you expect: the money maker is still the footwear category, which accounted for $5.5 billion, with apparel delivering revenues of $2.7 billion and equipment bringing in $420 million.
Regarding geography, the most noticeable impacts were in North America ($3.9 billion in sales, down 3% against the first quarter of 2017), and China ($1.1 billion in sales, up 9% over the same timeframe). Asia Pacific & Latin America saw revenues rise by 5% against the comparable period; Europe, Middle East & Africa 4%.
Parker told analysts on a call: "As the leader, we are fully committed to energizing and growing the marketplace through both our own Nike direct businesses and with strategic wholesale partners. Our vision is for every consumer who engages with the Nike brand to enjoy an elevated consistent experience regardless of channel. That's why we are working so closely with the select group of our strategic partners to define a new consumer experience together."
Dominion holds Nike in its Global trends Luxury Fund.
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