Nike Reports Q2 ’18 Revenue Up 5% YOY Despite Domestic Revenue Drop

Nike (NKE) reported an increase in international sales drove Q2 ‘18 revenue up 5% YOY (to $8.6 billion), but that growth couldn’t prevent the company from experiencing a 9% YOY decline in earnings (to $767 million) resulting from reduced gross margins and increased selling/administrative costs. Revenue in China was up 16% YOY (to $1.2 billion) during the most recent quarter, with sales in Europe, the Middle East and Africa up 19% YOY (to $2.1 billion). Domestically, sales were down 5% YOY (to $3.5 billion) with the decline attributed to disappointing footwear sales. As the company moves forward, it will continue to focus on a DTC strategy, relying less on struggling retailers.

Howie Long-Short: Nike announced back in October that it would scale back on the number of retailers it worked with, focusing on just a few dozen relationships, as the company looks to increase its e-commerce business (from 15% of revenue to 30% over the next 5 years). The decision appears to be a prudent one, as the brand continually appears atop lists of creditors with the biggest unsecured claims on bankruptcy filings (see: Golfsmith International HoldingsSports Authority and Shiekh Sports). The latest, The Sports Zone, Inc. filed for bankruptcy owning NKE $1.9 million. Good luck, collecting on that unsecured claim.

Fan Marino: Nike’s “pro hijab” went on sale in the U.S. on Wednesday, coinciding with a marketing campaign featuring fencer Ibtihaj Muhammad, boxer Zeina Nassar and runner Manal Roston. Muhammad is first US athlete to compete in the Olympics wearing a hijab. How did Muhammad end up fencing? It was a sport that allowed to her to compete while remaining fully clothed, as required by her religion.

Nike Sales Climb, Despite Declines in North America

For the balance of today’s newsletter, sign-up here!

Author: John Wall Street

At the intersection of sports & finance.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.