In December last year, Nike‘s President and CEO Mark Parker said, “Our strong second quarter results once again demonstrate Nike is a growth company”, putting successful expansion down to a ‘powerful portfolio‘.
Yesterday, Nike announced its Fiscal 2015 third quarter results and the outcome paralleled last year‘s achievements:
“Our strong third-quarter results show that our growth strategies are working, even under challenging macroeconomic conditions”, Parker commented.
The company achieved $7.46bn in third quarter revenue, up 7% year over year. Results were in keeping with Wall Street analyst predictions, with shares up 0.8%. Dilute earnings per share grew 19% to $0.89.
The Oregon based company was particularly pleased with its popular Converse brand, which recorded $538m in third quarter sales. This was a 28% surge from the same time the year before. Footwear as a whole provided impressive sales, with Western Europe seeing figures increase by 11%, and Greater China by 20%.
Disappointing footwear and apparel results were found in Central and Eastern Europe, showing a 10% decline in footwear and a 14% loss in apparel in the last three months to 28 Feb. This can be put down to political difficulties in Ukraine, with opposition Adidas‘ growth also suffering from the crisis in Eastern Europe.
Nonetheless, growth as a whole was on the up. Western Europe provided positive results, with its divisional revenues increasing 11% in the last 3 months and 8% over the last 9 months as a whole. Revenue for the quarter increased higher in Western Europe and China than it did in North America, as both provided Nike with a double digit improvement.
The brand‘s results highlight China as a go-to in the world of retail. Greater China‘s divisional revenues rose a staggering 18% in the last nine months. Sportswear is no longer just for fitness fanatics but has been turned into desirable fashion apparel.
The leading sports retailer does however, have competition from rival Adidas in Greater China, with the latter having been recognised as an employer of choice in China. Sportswear group Adidas is trying to catch Nike up, with a 10% rise in sales in 2014 across China.
Nike is expecting fiscal 2016 to provide lower than average earnings due to the strong US dollar. It expects full-year earnings to come in below target which means that the next quarter might be the opportune time for Adidas to narrow the gap with the sporting giant, if it invests in the right places.
The warnings haven‘t phased shareholders as Nike saw a 4.5% increase in its shares towards the end of Thursday, after Parker stated earlier that same day:
“Nike has the ability to deliver consistent shareholder value due to the strength of our brand, our relentless commitment to innovation and our powerful portfolio that allows us to invest in the opportunities with the highest potential for growth as well as manage risk.”
Nike is a powerhouse that looks set to stay, with its results on the whole rocketing. Adidas will have to pull its sports socks up if it wants to surpass the fitness colossal.
