Dec 18 (Reuters) – Nike on Thursday edged past market expectations for quarterly revenue, helped by resilient demand for its running shoes amid a big marketing push to fend off stiff competition from upstart brands in North America.
The company reported second-quarter revenue of $12.43 billion, compared with analysts’ average estimate of $12.22 billion, according to data compiled by LSEG.
Nike is returning to wholesalers, after it had reduced exposure to the channel for some time, and refreshing its product lines to focus on categories such as running and basketball, as it tries to reclaim its sporting roots under CEO Hill’s extensive turnaround plan.
The company is also investing in introducing product lines such as its NikeSKIMS partnership with Kim Kardashian’s brand as well as announcing a motorized footwear system to help casual athletes and mobility-impaired people move faster.
However, tariffs on imports from Vietnam, where the world’s largest footwear company manufactures around 50% of its shoes, have continued to pressure Nike’s margins.
Increasing its exposure at wholesalers has also hit margins, even though the company has been introducing fresher, higher-priced products at its direct-to-consumer channels.
Executives noted in September that Nike’s recovery would not be linear, as in the current economic environment, consumers have turned increasingly picky about spending big bucks on non-essential items with tariffs and inflation squeezing budgets.
The need to stay relevant through sleek marketing campaigns and innovation in its product lines has become more pressing for apparel makers, with companies such as yogawear maker Lululemon also losing ground to newer brands such as Vuori and Alo Yoga.
Nike’s gross margin for the quarter ended November 30 fell 300 basis points, compared with a 320 basis points fall in the preceding three-month period.
(Reporting by Juveria Tabassum in Bengaluru and Nicholas Brown in New York; Editing by Shinjini Ganguli)
Comments