Nike is losing sales in its home market

Nike is losing sales in its home market


Nike has met analysts’ expectations in the latest quarter. However, the business of the world’s largest sneaker manufacturer is shrinking in North America. This is mainly due to the German rival Adidas. In the first quarter of the fiscal year 2018, Nike did not meet its own forecasts. Sales of the world’s best-selling sports brand stagnated at around $9.01 billion, suffering the slowest quarterly sales growth in 7 years. Mark Parker thus only met the expectations of the analysts – but nothing more.

After all, on the home market the business is battling pressures. Revenue in the region was well over $3.9 billion, which is three percent less than from the previous year. This happened for the first time in more than 10 quarters. Adidas is currently much more active in the US. The brand with the three strips increased sales in North America in the second quarter by almost 30 percent to a good one billion euros.

On the positive side, however, the analysts were surprised by the profit of the listed company from Beaverton, Oregon-based Nike. The net income in the quarter fell by about a quarter to $950 million. According to the company, this was due to a gross margin decline, a higher effective tax rate and other expenses. But the analysts had expected a loss.

Despite the weakness of the US business, Nike total revenue benefited 9 percent sales growth in China and 4 percent growth in the Europe, the Middle East and Africa (EMEA) region. Revenue from Converse fell by 16 percent to $483 million.

“Looking ahead to the rest of fiscal 2018, we will ignite NIKE’s next horizon of global growth through the strength of our brand, the power of our innovative products and the most personal, digitally-connected experiences in our industry,” said CEO Mark Parker.

He promises higher margins and a better products to the athletes. But Nike has no other choice: in the past year and a half, many American sporting goods retailers have gone bankrupt; to reach the customers, it needs own shops, in the cities, especially on the Internet.