Score one for Nike Inc.
The activewear giant defied expectations in the fiscal second quarter, gaining on the top and bottom lines.
“With the energy we see in sports right now, along with today’s more active lifestyle, it’s no surprise that our industry continues to attract the competition,” Parker told analysts on a conference call. “As in sports, competition is a positive thing. It sharpens our focus in that we know there are areas in the short term where we haven’t executed as precisely as we would’ve liked.”
The ceo said Nike could gain ground by “hyper focusing” on growth opportunities.
“Starting with the consumer, who is not asking for more products but looking for more choice of the products they love,” he said. “We are responding by giving the consumer more distinctive options with fewer products, what we call an effort to amplify. Reducing styles and highlighting key items and concepts has a huge impact across our entire value chain. And this is especially important in North America and our key geographies as we better benefits supply demand to drive productivity and profitable top-line growth while highlighting and scaling our most compelling product story.”
To wit, Nike formed a partnership with private equity firm Apollo to establish an Americas-based, eco-friendly supply chain to produce apparel that is still in the process of being built.
The brand also seeking to tell its story better in bricks-and-mortar. Its new New York store, in SoHo, is a massive 55,000-square-foot space with areas devoted to running, basketball and soccer and is what the company called “the future of sport retail.”
These and other efforts, particularly on the product innovation, are meant to fuel the company’s drive toward a dramatic goal: $50 billion in revenues by 2020 — up from $32.4 billion last year.
Nike’s not there yet, but inched closer in the second quarter. Net income rose 7 percent to $842 million, or 50 cents a share, from $785 million, or 45 cents, a year earlier. Revenues for the three months ended Nov. 30 increased 6 percent to $8.18 billion from $7.69 billion.
Both profit and sales topped expectations — Wall Street was looking for earnings to fall to 43 cents a share on sales of $8.09 billion — and the stock gained 1.7 percent to $52.69 in after-hours trading.
There was, however, some hint of challenge in the numbers going forward. Nike said its currency-neutral futures orders at the end of the quarter were growing by 2 percent, with a 4 percent decline in North America. The company called the decline in its home market a “temporary” anomaly.