Nike share price rises on strong Chinese sales
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Nike share price rises on strong Chinese sales

Nike beat the Street’s predictions on both revenue and earnings in its third quarter. The company, which reported last Thursday, said China outperformed and it was expecting its North American sales slump to peter out. Shares in the iconic footwear brand rose on the back of the news.

Nike’s share price is up by 6% so far this year

graph 2603 nike

SOURCE: Yahoo Finance

Nike said that sales in Greater China rose by an incredible 24%, easily compensating for a 6% slump in North America. Despite this slump, the company’s CEO, Mark Parker, says that he sees the region recovering in the near term, as Nike focuses on adding experiences to stores and scaling new products. According to Parker, the company’s fourth quarter in North America has gotten off to a strong start, as its new React cushioning technology has seen a “record consumer response.”

Overall, revenue for the third quarter rose by 7% year on year to $8.98 billion. This exceeded analysts’ expectations for $8.85 billion. The company took a hit from new U.S. tax legislation, which impacted earnings per share by $1.25 and resulted in an overall net loss for the quarter of $921 million. Nonetheless, this impact was significantly less than consensus estimates suggested: Nike reported earnings of 68¢ per share – a full 15¢ higher than forecast.

Aside from brilliant China and sluggish North America, Nike saw sales growth of 19% in Europe, the Middle East and Africa, and 13% in Asia Pacific and Latin America. The company also reported that it was making progress in its strategy to sell more directly to consumers, that it would begin testing mobile checkout in two stores “ahead of a wider rollout”, and that it had acquired Zodiac – a New York company which “helps retailers identify the customers who will be the most valuable to their business.” All exciting news for investors.

Disclosure

Dominion holds Nike in its Global Trends Luxury Fund.


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