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Nike turns in solid quarter after Olympics

International Business
Wed, 28 Sep 2016
AFP


New York: Global sports gear titan Nike reported solid revenue growth and beat analyst earnings forecasts for its fiscal first quarter Tuesday, despite a cost surge tied to the Brazil Olympics.

Nike reported revenues for the quarter ended August 31 up 7.7 percent from a year ago to $9.1 billion, around $200 million higher than expected.

Earnings per share, bolstered by share buybacks, came in at 73 cents, compared to 67 cents a year ago and well past the 56 cents analysts had predicted.

"Fuelled by an incredible summer of sport, Nike delivered strong global growth and led the industry through disruptive innovation," said Mike Parker, Nike chairman, president and chief executive.

The company got some sales help from the Olympics, but also saw marketing costs rise significantly during the same period as it heavily promoted its brand during the Rio games.

it also got a significant boost from a one-time tax benefit that cut its overall tax bill for the quarter to 2.5 percent from 18.4 percent a year ago.

But Nike shares sank in after-hours trade as investors focused on future order and inventory data, which pointed to a slowdown.

Shares were down 3.0 percent to $53.66.

After a six percent gain in North America revenues in the first quarter, future orders in its primary were up just one percent, Nike reported. Inventories at the end of August were up 11 percent.

After several years dominating the global sports shoes and equipment market, Nike has found itself fending off tough challenges from Adidas, Puma and Under Armour.

Adidas appeared to gain advantage from its muscular presence in the Summer Olympics and the Euro 2016 football tournament.

Under Armour has strongly cut into the sports fashion sector, and won a big share of a key market segment -- basketball shoes -- with its sponsorship of the newest NBA superstar, Stephen Curry.

"The combination of elevated competition and a lifestyle shift with 75 percent-plus of sneakers never seeing a court introduces a greater fashion/price element" that challenges Nike's top-line presence, said Matthew Boss of JPMorgan in a client note.

"With an eye to the field, a battle for shelf space is underway in the premium retail channel leaving Nike most vulnerable."

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