Nike On Tuesday, he published a surprise growth of sales in his first fiscal quarter, but the giant of the shoes still has work ahead to execute his change.
The company said the income increased by 1% in the three months that ended on August 31, after saying that previously it anticipated that sales would fall into a percentage of digits of mid -one digit in the period.
Even so, Nike's profits fell 31%, while the gross margin fell 3.2 percentage points to 42.2% during the quarter, a warning signal for investors that their efforts to clarify through the old inventory are still ongoing.
In a press release, Finance Chief Matt Friend warned that “progress will not be linear.”
“I am encouraged by the impulse that we generate in the quarter, but progress will not be linear since the dimensions of our business recover in different deadlines,” Friend said. “While we navigate several winds against external, our teams focus against what we can control.”
This is how Nike was performed during the quarter compared to what Wall Street was anticipating, according to LSEG's consensus estimates:
- Profit per action: 49 cents against 27 expected cents
- Revenue: $ 11.72 billion compared to $ 11.0 billion expected
Nike's net income for the period was $ 727 million, or 49 cents per share, compared to earnings of $ 1.05 billion, or 70 cents per share, in the quarter of the previous year.
Sales increased to $ 11.72 billion, approximately 1% of $ 11.59 billion the previous year.
In a statement, CEO Elliott Hill said the company is advancing in three key areas: wholesaler, career and North America. During the quarter, wholesale revenues increased from 7 to approximately $ 6.8 billion%, while sales in North America rose 4% to $ 5.02 billion, better than analysts of $ 4.55 billion, according to Streetacount.
However, beyond those three areas, Hill acknowledged that parts of the business are still fighting.
“While we have victories to our credit, we still have work ahead to obtain all the sports, geographies and channels on a similar path as we administer a dynamic operational environment,” said Hill.
During the quarter, Nike Direct sales fell 4% to around $ 4.5 billion. Income in China, one of the company's most important markets, fell 9%.
Since Hill took over almost a year ago, he has been working so that Nike grows again and undoes part of the work that implemented his predecessor John Donahoe. One of the most important parts of that strategy has been to rekindle Nike's innovation engine and cleaning through the Rancio inventory to give way to new styles.
Although the strategy is crucial for Nike's efforts to grow and recover the market share, it comes with short -term pain. Cleaning the old inventory has required Nike to trust less profitable discounts and sales channels to move products, which has impacted its profitability.
During the quarter, inventories fell 2% compared to the previous year as the units decreased, which was compensated by the increase in product costs related to the highest rates.
Before Nike launch, investors were looking for clues about how those efforts are going and how much more time they will take. The company was expected to provide more information about its progress during a telephone conference with analysts at 5 PM ET.
Beyond inventory management, Hill has also committed to realign Nike's corporate structure, so once more would segment team teams instead of women, men and children. At the end of August, the company began to shuffle equipment. As part of the restructuring, Nike said that he would reduce about 1% of his staff, and most employees would move to new roles before September 21.
Hill has said that an approach in sports on lifestyle will help the company recover its crucial athlete consumer, but lifestyle merchandise remains an important part of the strategy because it allows Nike to reach a larger consumption segment and more women. The growth of the number of customers has been another important part of Hill's strategy and the recent Nike association with the Kim Kardashian Skims Shapewear brand is one of the ways in which it is coming there.
Nikeskims, originally scheduled to launch in spring, was officially launched last week. Investors will seek color on how the new brand is working and how it could affect sales.
This story is developing. Consult the updates again.
