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Nike reports higher profits, touts digital strategy
NEW YORK, June 29, 2018 (BSS/AFP) – Nike shares surged Thursday as the
company reported higher earnings, announced a new share buyback program and
talked up its ambitious digital investment program that emphasizes direct
selling to consumers.
Nike reported earnings of $1.1 billion in its fiscal fourth quarter, up
12.8 percent from the year-ago period.
Revenues also rose 12.8 percent to $9.8 billion. The company bested
analyst expectations in both earnings per share and revenues.
China was the company’s strongest region in terms of revenue gains, where
sales jumped 35 percent.
Sales in North America rose by a more modest three percent, but that was
still an improvement after the decline in the prior quarter. Chief executive
Mark Parker said North America has “sustainable” momentum heading into its
fiscal 2019.
Revenues in Nike’s home region have been pressured by store liquidations
and retailer turmoil that had led to a glut of apparel and shoes on the
market.
But retail analysts say market conditions have improved of late.
Nike has also bolstered its direct selling initiatives, while spending
more on sports marketing and product launches.
Executives expressed confidence in the digital strategy, with some new
marketing campaigns generating hundreds of millions of social media
impressions and the company seeing strong growth of its Nike Plus
application.
Nike is learning to calibrate output of goods and categories based on
consumer interest, what executives called “demand sensing.”
Parker said a partnership with Amazon is “progressing well,” although the
venture is at an earlier stage compared with collaborations some other
platforms, such as the Chinese website Tmall.
“We remain focused on elevating consumer experience on the platform,”
Parker said of the Amazon venture. “We’re learning a lot.”
The company also announced a new $15 billion share repurchase program in
the wake of US tax reform in December that has resulted in a much lower tax
rate.
Shares of Dow member Nike surged 9.2 percent to $78.30 in after-hours
trading.
BSS/AFP/HR/0935