Despite healthy sales growth — fueled by a big bump in spending on product launches, digital marketing and consumer events — Nike says its future orders are up 7%, down from 12% in the second quarter of last year, and from 11% last quarter.
While that’s sparking some concern about growth, observers say the footwear giant continues to build its market share. For the second quarter of its fiscal year, revenues rose 15% to $7.4 billion, with growth in every part of the world and every category, except for golf. (Revenues for its Converse brand shot up 24% to $434 million.) And net income for the Beaverton, Ore.-based company jumped 23% to $655 million.
And it upped spending on demand creation 11%, to $766 million.
Observers were mostly positive, and Deutsche Bank reiterated its “Buy” recommendation, based on the company’s strengths, as well as the continued popularity of running in North America and the overall strength of the athletic sector.
Sterne Agee analyst Sam Poser lowered estimates for Nike, based on currency concerns and the strong U.S. dollar, though, and remains neutral on the company.
“Nike continues to take share,” he writes, and “has opportunities to further separate itself from competitors by spending wisely: While Nike is conscious of near-term financial targets, it is very much focused on the healthy long-term growth. Nike will likely continue to gain share worldwide due to ongoing product innovation and the massive dollars dedicated to R&D, marketing, and infrastructure.”
He points out that its growth in North America “continues to be exceptional,” with footwear climbing 18.3% and clothing gaining 14.7%. And in addition to double-digit gains in basketball, men's and women's training, and sportswear, he sees room for additional growth in its fashion running business.