Nike shares rallied the most in almost two years yesterday after the athletics brand delivered a rosy forecast and announced plans to forge a closer relationship with shoppers, a move that will let Amazon and Instagram users buy its runners directly.
The company expects sales to increase by a mid- to high-single-digit percentage this year. The prospect of faster growth helped send shares of Nike up 8.8% at one stage, after publishing its earnings late on Thursday.
The upbeat forecast follows a slowdown at Nike, especially in the key north American market, that had raised concerns the sporting-goods giant was losing its edge.
Adidas, a hot commodity in the US after falling out of favour for years, has been a particular threat. However, Nike assured investors that the region will rebound. New products will be key to the resurgence, said chief executive Mark Parker.
“I’ve never felt as energised by what we have from innovation coming into the pipeline. That’s why we’re so confident” he said.
The company had rattled shareholders three months ago with poor sales, signalling that Adidas and Under Armour were grabbing market share. The latest results suggest Nike is doing a better job defending its turf, especially in overseas markets.
Nike’s efforts are still a work in progress. It’s also increasingly trying to bypass retail partners and sell athletic gear directly to customers. As part of the push, the company announced a project to sell shoes through Instagram, the popular photo app. With the Instagram agreement, Nike becomes one of the rare brands able to sell goods within the app. It also confirmed plans to offer its wares directly through Amazon. Nike’s wholesale brand revenue rose 5% to $23.1bn (€20.2bn) in fiscal 2017 while direct-to-customer revenue jumped 18% to $9.1bn.
E-commerce surged 30%. Revenue rose 5.3% to $8.68bn in the fourth quarter. Sales in north America, Nike’s largest and most competitive market, were flat. However, the company posted stronger growth in China and emerging markets. n Bloomberg
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