Nike Inc reported lower-than-expected quarterly revenue on Tuesday as the world's largest footwear maker battles for market share in North America with a resurgent Adidas AG and a fast-growing Under Armour Inc.
Nike Inc reported lower-than-expected quarterly revenue on Tuesday as the world’s largest footwear maker battles for market share in North America with a resurgent Adidas AG and a fast-growing Under Armour Inc. Shares of the Dow component were down 3.6 percent at $55.91 in post-market trading on Tuesday, after the company also forecast a key metric on orders below analysts’ expectations. Nike and its Jordan brand have been dominant in the U.S. footwear market for years, but Adidas and Under Armour are gaining ground by revamping their brands and introducing new products.
Nike has lost basketball sales to Under Armour since its rival poached the NBA’s Golden State Warriors star Stephen Curry in 2013.Germany’s Adidas has also been successful in its efforts to muscle back into the U.S. market, with fashion shoes made popular by collaborations with celebrities such as Kanye West, Pharrell Williams and Rita Ora. “A lot of the concern about Nike is its growth in a competitive environment. Three to five years ago, a competitive environment (for Nike) was almost non-existent and the market was moving towards athleisure,” said Edward Jones analyst Brian Yarbrough.
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Nike said its worldwide orders for delivery, a demand gauge it calls “futures orders”, fell 1 percent on a currency-neutral basis. Analysts on average had expected it to rise 3.5 percent, according to research firm Consensus Metrix. On a reported basis, futures orders fell about 4 percent. Nike’s sales in North America, the company’s biggest market, rose 3 percent in the quarter ended Feb. 28.
Sales in Greater China were up 9 percent in the quarter, falling short of double-digit growth for the first time in at least nine quarters.However, excluding the impact of currency moves, sales in the Greater China region were up 15 percent.Nike was criticized at China’s annual consumer rights day television show earlier this month, where it was said to have mislead consumers over high-tech air cushions in some of its “Hyperdunk” basketball shoes.
Gross margins contracted 140 basis points to 44.5 percent during the quarter, hurt by a strong dollar and more off-price sales.Nike reported a third-quarter profit of 68 cents per share, compared with the average analyst estimate of 53 cents per share.Revenue rose 5 percent to $8.43 billion in the quarter, versus the average estimate of $8.47 billion, according to Thomson Reuters I/B/E/S. Excluding currency fluctuations, revenue rose 7 percent.