What a rebound!
Nike regains footing with basketball biz
Nike is in fighting form. The largest sportswear company — whose stock was down 18 percent as rivals Under Armour and Adidas stole customers — stumbled this year, but it’s not down for the count, says Chief Executive Mark Packer.
“We are facing our challenges head-on and we’re confident in our plans,” Parker said during a Tuesday evening earnings call to detail results of the three months ended Nov. 30.
Thanks to its basketball business, Nike delivered surprisingly strong results, beating estimates for its fiscal second quarter with a 6 percent rise in sales, to $8.18 billion, and an 11 percent profit jump.
Most of the growth was fueled by China, where sales ballooned by a whopping 17 percent.
In North America, which accounts for half of Nike’s sales, business grew just 3 percent.
Shares of Nike closed up 1.9 percent on Tuesday, to $51.79 — and were up another 1.9 percent in after-hours trading.
Nike had lost its touch with basketball sneakers, churning out relative air balls over the past year with recent LeBron, Jordan and Kobe lines.
But management said on Tuesday that its new designs were hits.
“Basketball is back,” said Trevor Edwards, president of the Nike brand. “Our basketball business is much healthier today than it has been in 18 months.”
The company also said it’s focusing on producing its products faster, and reducing the time it takes from the factory to the store from months to weeks, Parker said.
It’ll take more than one quarter of good news to convince Wall Street, however, that Nike has diagnosed and fixed its problems.
Retailers have been giving more shelf space to Adidas, noted Canaccord Genuity analyst Camilo Lyon in a research note. Meanwhile, Nike has had “weak sell-throughs of Jordan launches,” he said.
In November, the Adidas brand grew by 156 percent compared with Nike’s 29 percent growth, according to The NPD Group. The company said its futures orders were growing by 2 percent.