Shares of Nike reached a record high on Friday after the sports apparel company reported a 3 per cent increase in sales in the most recent quarter. Analysts said that Nike was back in fashion in North America again.
This increase in revenues for the US sportswear company for the first quarter was its first quarterly year-on-year increase in over last one year in its critical North American divisions’ business.
According to Nike, the company now expects the results for the current year in total would be better than expected earlier.
“We have momentum,” chief executive Mark Parker said.
The total revenues globally for the company also marked a 13 per cent increase at $9.8 billion which was more than what the analysts and Wall Street had been expecting.
Revenue growth is also being driven by its international business even though for the company, its North America business is the most important because it gives about 40 per cent of the total revenues of the company.
The Greater China region accounted for the highest growth in revenue for the company globally with a growth of 25 per cent year-on-year in the most recent quarter.
Consumer trends that now are increasingly preferring the retro styles, such as its classic high-top Jordans and the enhanced intense trainer fans are driving the business growth for Nike.
Also gaining traction are the sleek Flyknit shoes of the company which are easily distinguishable by their digitally knit cloth fabric.
Nike also said that it had also benefited from its strategy to sell its products online. The company now makes use of sites such as Amazon and Tmall for online sale.
in the most recent quarter, there was a 41 per cent growth in revenues generated from its online sale channel.
The encouraging results for the latest quarter were announced by the company after the bell on Thursday which resulted in a rise of almost 10 per cent in the value of its share in after-hours trading. In morning trading in New York on Friday, the shares of the company were nearly 12 per cent higher at $80.13.
“The Nike story is officially back at this point,” said Barclays analyst Matthew McClintock.
For the latest quarter, the profits for the company saw an increase of 13 per cent for the latest quarter at $1.1 billion. This was aided by the recent US tax code changes which resulted in the lowering in of the tax rate for the company by more than half at 6.4 per cent.
However, in the most recent quarter, with sales sinking 8 per cent, the once ubiquitous Converse has fallen out of fashion,
(Adapted from BBC.com)