Nike shares fall on slower North American sales growth

But sales in North America rose seven percent, which was slower than the level in the second quarter and below leading forecasts.

By Author  |  Published: 22nd Mar 2019  3:42 pm

New York: Nike shares fell on lower sales growth in North America on Thursday as the company returned to third-quarter profitability while touting new investments in e-commerce and women’s athletics.

The sports giant scored profits of $1.1 billion in the quarter ending February 28, compared with a $921 million loss in the year-ago period due to a one-time tax cuts. Revenues rose seven percent to $9.6 billion. Sales growth was led by China with 19 percent, but increased in all regions.

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But sales in North America rose seven percent, which was slower than the level in the second quarter and below leading forecasts. Nike continued to boost spending on digital commerce through new mobile applications, enhanced customer memberships and loyalty programs.

The initiatives are partly motivated by a commercial shakeout in the retail business that has derailed some chains that once sold the brand and sharpened the need for direct sales. Chief Financial Officer Andy Campion told an analyst conference call that the investments stem from a belief that “from a long-term perspective, we see digital comprising the majority of our business.”

Nike is also focusing marketing and product development dollars on female customers, unveiling a major “Dream Crazier” ad campaign narrated by Serena Williams that has been viewed nearly 8.7 million times on YouTube and has been most-ever-shared item on Instagram in North America, executives said.

Chief Executive Mark Parker said Nike’s overall sales are still “underindexed” to women and that the market offered “tremendous upside” worldwide, including in China for products such as running gear and sports bras. Shares of North America fell 4.6 percent to $84 in after-hours trading.