Nike shares rose yesterday despite the sporting goods giant’s quarterly revenue growth and its forecast for orders missing analysts’ estimates and underscoring its struggle to fend off competition from Adidas and others, especially in its home turf of north America.
Revenue for the three months to the end of May rose nearly 6% to $8.24bn, while analysts on average had expected revenue of $8.28bn (€10bn).
Sales in north America were flat, weighed down by a fall in clothing and equipment sales. Footwear sales inched up 2%. Net income fell 2.2% to $846m.
Nike’s shares, already the third worst performer on the Dow Jones Industrial Average with a 15% drop this year, fell another 4.2% before recovering to show a 2.53% rise in afternoon trading yesterday.
While Nike still dominates in north America, its biggest market, analysts have said it is losing ground to Germany’s Adidas, whose shares were ahead 2.5% yesterday, and smaller domestic rivals such as Under Armour.
Nike’s revenue in the fourth quarter was hurt by a strong dollar that ate into overseas sales. Clearing excess inventory in north America also hurt sales and margins, and is expected to dent the current quarter as well, Nike said.
While Nike noted the volatility in the currency markets after Britain’s shock vote to leave the EU, it maintained its full-year sales growth forecast.
It expects revenue to grow in the high single digits for the year to the end of next May.
Adidas, by contrast, expects its full-year currency-adjusted sales to grow 10% to 12%, thanks in part to a busy sporting calendar that includes the Olympics and Euro 2016.
Nike’s orders for delivery from June through November in north America, a demand gauge it calls “futures orders”, missed expectations, signalling slowing growth.
Its futures orders in the region were up 6% at the end of the fourth quarter, while analysts were expecting growth of 9%.
Slipping demand for its basketball shoes hurt Nike’s “futures orders”, analysts said.
The success of Under Armour’s basketball shoes endorsed by basketball star Stephen Curry have eaten into demand for Nike’s, endorsed by Michael Jordan and LeBron James.
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