Nike's North America sales fail to impress, shares slip
By Uday Sampath Kumar (Reuters) - Nike Inc reported quarterly revenue that failed to beat Wall Street estimates for the first time in over a year, as sales fell short of expectations in its biggest market of North America, sending its shares tumbling 5 percent on Thursday. Shares of the world's largest sportswear maker have gained nearly 19 percent this year, as investors cheered its 'Consumer Direct Offence' strategy that includes a focus on online sales, new launches and supply chain improvements to bring fresh products to shelves faster.
By Uday Sampath Kumar
(Reuters) - Nike Inc reported quarterly revenue that failed to beat Wall Street estimates for the first time in over a year, as sales fell short of expectations in its biggest market of North America, sending its shares tumbling 5 percent on Thursday.
Shares of the world's largest sportswear maker have gained nearly 19 percent this year, as investors cheered its "Consumer Direct Offence" strategy that includes a focus on online sales, new launches and supply chain improvements to bring fresh products to shelves faster.
The company has launched timed, limited-edition sales on its app, often in collaboration with celebrities and athletes, called "drops," generating hype around its brands, especially with its Jordan line of basketball shoes.
Nike has also introduced sneakers such as the Air Max 720 and Epic React Flyknit 2 to capture market share in the United States.
The efforts, however, fell short of analysts' elevated expectations. North America sales rose 7 percent to $3.81 billion in the third quarter, falling short of estimates of $3.87 billion, according to IBES data from Refinitiv.
"While it's not very clear what caused the domestic weakness, it's possible that the news of what happened with the Duke University player's shoe had a short-term negative impact," said Kian Salehizadeh, a senior analyst at investment firm Blockforce Capital.
College basketball superstar Zion Williamson sprained his knee in February after his Nike sneaker split during a game, prompting an outcry on social media.
Salehizadeh, whose firm owns shares in Nike through ETFs, said overall retail weakness in the United States over the last few months could also have hit sales.
Nike Chief Financial Officer Andrew Campion highlighted timing of launches of some NBA apparel products last year on a post-earnings call. A decline at the Converse brand also weighed.
"Converse is losing out to brands like Vans, while Nike seems to be focussing more on the growth of its Jordan business," Jane Hali & Associates analyst Jessica Ramirez told Reuters.
Nike said it expects low single-digit reported revenue growth in the current quarter, compared to analysts' estimates of a 6.1 percent rise.
This comes as analysts have said Nike is likely to gain after German rival Adidas warned that supply chain issues would curb sales growth in the first half of the year, particularly in North America.
Nike's total revenue increased 7 percent to $9.61 billion, in line with analysts' average estimate.
The maker of Air Force 1 sneakers reported net income of $1.1 billion, or 68 cents per share, for the third quarter ended Feb. 28, beating estimates of 65 cents.
(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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