Despite Olympic Wins, Nike's Profits Fall
Nike may have made a strong showing this summer, thanks to the Olympics and other high-profile sporting events, but slower growth in China slowed profits down. The Beaverton, Ore.-based company says its profits fell 12% in its fiscal first quarter, to $567 million. Revenues rose 10% to $6.7 billion (a 15% rise, excluding currency changes.) In North America, revenues grew 23%, with footwear gaining 20% and apparel 26% in the region.
Still, its executives were extremely bullish about the company’s performance in a webcast detailing its results, pointing out that revenues grew in every region but Japan. And it was especially gung-ho on the strong results in its running division, pointing out that this is it 10th consecutive quarter of double-digit growth. And performance in the women’s running division was even stronger.
In fact, Mark Parker, president and CEO of Nike, Inc., says women continue to be key to the company’s growth strategy. “Every national team included at least one woman, a first in the Olympics,” he says in the webcast. “And 44% of participants were women. That’s good for sport, and good for Nike. We had a phenomenal summer.”
China will continue to be an important market, it says, but the combination of the slowing economy and increasing consumer expectations have created “choppy waters for profitability,” the company says.
Higher marketing costs drove selling and administrative expenses up 18% to $2.2 billion, due to “support for key product initiatives, as well as support for the Olympics and European Football Championships,” it says. Worldwide, its futures orders are up 6%. And inventories rose 10%, in line with revenue growth, which it says reflects strong demand for its products.
The company says it will continue to focus on China, as well as product innovation, that include Flyknit running sneakers, and Nike+ FuelBand. It also says its Nike + community has reached eight million.