Nike Reports Sluggish North American Sales

MarketsDow Jones Newswires

Nike Inc. said its revenue rose 6% in the latest quarter as the athletic gear giant's growth in most of its international markets offset sluggish sales in its North American business.

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Shares of the Beaverton, Ore., company slid 6.7% to $49.51 in after-hours trading as revenue missed expectations and the company reported slower growth in its future orders, excluding currency impacts. Before Tuesday's results, the stock had fallen 15% in 2016.

For the period ended May 31, Nike's revenue rose to $8.24 billion from $7.78 billion a year earlier. Analysts polled by Thomson Reuters expected revenue of $8.28 billion. Excluding currency fluctuations, revenue improved by 9%.

The world's largest sportswear maker by revenue reported that its sales in North America edged up 0.1% to $3.74 billion.

In all, Nike reported a profit of $846 million, down from $865 million a year earlier. On a per-share basis, earnings were flat at 49 cents amid fewer shares outstanding. Analysts expected per-share profit of 48 cents.

Nike said futures orders, which reflect products scheduled for delivery from June through November, rose 8% on a global basis, compared with an increase of 2% a year earlier and the 12% growth logged for the previous quarter. Futures orders are closely watched by investors as a benchmark for demand for Nike products.

Excluding currency impacts, futures orders increased 11%, compared with a rise of 13% a year earlier and an increase of 17% in the previous quarter.

In its North America business, future orders improved 6%, compared with growth of 13% a year earlier and an increase of 10% in the previous quarter.

Gross margin fell to 45.9% from 46.2%.

Nike has used expensive sponsorships to increase its market share in sports such as soccer and basketball. In the latest period, Nike increased such spending -- called demand creation -- by 6.6% to $873 million.

For the 12 months ended May 31, excluding currency rates, Nike reported running-category sales rose 10%. Jordan-brand basketball-related sales climbed 21%, and Nike-brand basketball-related sales rose 2%.