Nike reports higher profits, starts new digital strategy

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AFP |

Nike shares surged Thursday as the company reported higher earnings, announced a new share buyback program and talked up its ambitious digital investment program that emphasizes direct selling to consumers.

The company also announced a new $15 billion share repurchase program in the wake of US tax reform in December that has resulted in a much lower tax rate.

Nike reported earnings of $1.1 billion in its fiscal fourth quarter, up 12.8 percent from the year-ago period.

Revenues also rose 12.8 percent to $9.8 billion. The company bested analyst expectations in both earnings per share and revenues. China was the company’s strongest region in terms of revenue gains, where sales jumped 35 percent.

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Sales in North America rose by a more modest three percent, but that was still an improvement after the decline in the prior quarter. Chief executive Mark Parker said North America has “sustainable” momentum heading into its fiscal 2019.

Revenues in Nike’s home region have been pressured by store liquidations and retailer turmoil that had led to a glut of apparel and shoes on the market.

But retail analysts say market conditions have improved of late. Nike has also bolstered its direct selling initiatives, while spending more on sports marketing and product launches.

Executives expressed confidence in the digital strategy, with some new marketing campaigns generating hundreds of millions of social media impressions and the company seeing strong growth of its Nike Plus application.

China was the company’s strongest region in terms of revenue gains, where sales jumped 35 percent. 

Nike is learning to calibrate output of goods and categories based on consumer interest, what executives called “demand sensing.”

Parker said a partnership with Amazon is “progressing well,” although the venture is at an earlier stage compared with collaborations some other platforms, such as the Chinese website Tmall.

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“We remain focused on elevating consumer experience on the platform,” Parker said of the Amazon venture. “We’re learning a lot.”

The company also announced a new $15 billion share repurchase program in the wake of US tax reform in December that has resulted in a much lower tax rate.

Shares of Dow member Nike surged 9.2 percent to $78.30 in after-hours trading.

 

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