Nike rallies after rosy sales outlook restores investors’ faith

Bloomberg

Nike Inc. rallied the most in almost two years after the athletic brand delivered a rosy forecast and announced plans to forge a closer relationship with shoppers, a move that will let Amazon and Instagram users buy its sneakers directly.
The athletic brand expects sales to increase by a mid- to high-single-digit percentage this year, excluding currency effects. The prospect of faster growth helped send shares of Nike up as much as 8.8 percent after U.S. markets opened on Friday.
The upbeat forecast follows a slowdown at Nike, especially in the key North American market, that had raised concerns the sporting-goods giant was losing its edge. Adidas AG, a hot commodity in the U.S. after falling out of favor for years, has been a
particular threat.
But Nike assured investors Thursday that the region will rebound. While North American sales are expected to dip in the first half of fiscal 2018, they should post a gain for the full year. New products will be key to the resurgence, Chief Executive Officer Mark Parker said.
“I’ve never felt as energized by what we have from innovation coming into the pipeline,” he said on a conference call. “That’s why we’re so confident.”
The shares touched $57.87. The stock had lost 3.6 percent in the past year through Thursday’s close.
Nike also posted better-than-projected earnings in the fiscal fourth quarter, which ended May 31. Profit amounted to 60 cents a share in the period, compared with a 50-cent estimate of
analysts.
The company had rattled shareholders three months ago with disappointing sales, signaling that Adidas and Under Armour Inc. were grabbing market share. The latest results suggest Nike is doing a better job defending its turf — especially in overseas markets.
But even with the brighter outlook, Nike’s efforts are still a work in progress. The Beaverton, Oregon-based company has been cutting jobs and shaking up management ranks in a bid to speed up its operations and reduce
bureaucracy.
It’s also increasingly trying to bypass retail partners and sell athletic gear directly to customers. That effort — called the Consumer Direct Offense — is being overseen by Nike brand President Trevor Edwards, a possible successor to Parker as CEO.
As part of the push, the company announced a project on Thursday to sell shoes through Instagram, the popular photo app. It also confirmed plans to offer its wares directly through Amazon.com Inc. — an initiative that was previously reported by Bloomberg last week.