NKE Nike Inc

By Khadeeja Safdar 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 22, 2019).

Nike Inc. said strong consumer demand in the U.S. and China helped the company sell more products at full price and through its own apps and websites in the holiday quarter, but it cautioned that sales growth would slow in the current quarter.

The sneaker and sportswear giant reported that revenue rose 7% in the third quarter ended Feb. 28, or 11% excluding currency swings. The company had a 7% gain in North America and a 19% jump in the Greater China market. Both markets, however, generated slower growth than they did in the quarter ended Nov. 30.

On a conference call Thursday, executives said they expect revenue to rise by a high-single-digit percentage in the company's fiscal fourth quarter. Currency pressures will reduce the growth by 6 percentage points, leaving the company with a low-single-digit gain from a year ago, they said.

Shares of Nike, which have rallied in recent months, fell about 4% to $84.30 in after-hours trading on Thursday.

Chief Executive Mark Parker said Nike's digital business grew 36%, on a constant-currency basis, in the quarter and reached $1 billion in revenue for the first time.

The company has been adding new features to its apps to offer more personalized products and reward its best customers, he said. "There are teams all over Nike piloting new ideas, improving our concepts."

The company recently opened a six-story flagship store on Fifth Avenue in Manhattan, where shoppers can scan product bar codes or request to try on clothes using their smartphones. The product selection on one of the floors is also informed by online purchase data in the local area.

In China, executives said demand has been strong as running and other sports become a bigger part of life for consumers there.

"We have great momentum in China, but we are still far from realizing the long-term opportunity in this market," said Andrew Campion, Nike's chief financial officer.

The earnings report comes about a month after a Nike sneaker worn by Duke University basketball star Zion Williamson, who is expected to be the top pick in this summer's NBA draft, ripped open during a high-profile game. Nike's stock dropped on the news but has since rebounded.

Demand for footwear has been strong in the U.S. according to the latest results from key Nike retailers such as Foot Locker Inc. and Dick's Sporting Goods Inc. Last week, rival Adidas AG reported a 15% jump in its North America business in 2018, but warned a supply-chain bottleneck would prevent it from meeting demand for its products in the coming months.

For the quarter, Nike reported net income of $1.1 billion on total sales of $9.61 billion. A year ago, it had a quarterly loss of $921 million, due to changes to U.S. tax laws, and $8.98 billion of revenue.

Mr. Parker said the women's sneaker business is growing faster than men's, which is an opportunity for his company.

"We see women embracing the sneaker culture more and more every day, so we're scaling up popular models and creating new models for women specifically," he said.

The CEO also said Nike would be introducing more sneakers that cost less than $100 later this year. "We have to be competitive at every level," he said, not just at that price point in North America but in other markets. "I think there's a great opportunity for us."

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

March 22, 2019 02:47 ET (06:47 GMT)

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