NEW YORK June 29 — Sports equipment giant Nike’s shares have skidded in disappointment over its sales performance in the face of strong emerging competitors in North America.
Nike, sponsor of leading world sports names including Real Madrid striker Cristiano Ronaldo, revealed yesterday a rise in quarterly sales — but it was not as large as investors had anticipated.
“A lot of the initial fears investors had about the increasing competitive landscape, specifically around this quarter, actually came true,” said Chen Grazutis, an analyst at Bloomberg Intelligence.
Nike, which is up against rising competitors Under Armour and New Balance as well as a resurgent Adidas, suffered a seven percent decline in its share price at one point in after-market electronic trade.
By early today, the shares were down 2.1 per cent at US$50.95 (RM204.86).
The sportswear and equipment manufacturer said sales rose six per cent from a year earlier to US$8.24 billion in the three months to the end of May.
That was slightly below average market analysts’ forecasts for revenue of US$8.28 billion, according to Consensus Metrix data cited by Bloomberg News.
Net profit fell 2.2 per cent to US$846 million over the same period.
In North America, Under Armour is eating into Nike’s basketball business thanks in part to its sponsorship of NBA star Stephen Curry of the Gold State Warriors.
LeBron James hopes
Nike is banking on its NBA megastar LeBron James, who led the Cleveland Cavaliers to a championship this month, to help pull back some of that lost ground.
USA Basketball has announced, however, that James will not be on the 12-man USA squad at the Rio de Janeiro Olympics.
Internationally, Nike faces a strengthening rival in Adidas, which last week said it expected revenue in its soccer business to shoot 12 per cent higher to a record US$2.5 billion this year.
Nike, by contrast, reported soccer business revenue of US$2.14 billion in the 12 months to the end of May.
Besides stiffer competition, Nike was hit by a stronger US currency, which undercut the dollar-based value of its international sales made outside of the United States.
A key investor concern for was a smaller-than-expected 11-per cent increase in Nike’s “future orders” for athletic footwear in the June-November period, a barometer of expected demand.
Analysts say the outlook is clouded for Nike, which is targeting sales of US$50 billion a year by 2020, up from US$32.4 billion in its 2015-2016 business year to the end of May. — AFP
