Nike reports higher profits but growth slows in China

[NEW YORK] Nike reported solid gains in both quarterly profit and revenues on Tuesday but shares fell in after-hours trading on slowing growth in China.

The sports apparel and sneaker giant, which has made headlines in recent weeks over an edgy ad campaign featuring Colin Kaepernick, reported a 15 per cent jump in earnings for fiscal first quarter 2019 to US$1.1 billion.

Revenues climbed 10 per cent to US$9.9 billion.

Nike scored revenue gains in all four of its regions, with the strongest increase in China, where year-over-year revenues gained 24 per cent to US$1.4 billion.

However, that jump was a bit below the 35 per cent leap in year-over-year revenues reported in the prior quarter.

Nike's results were also pinched somewhat by higher costs, as it ramps up spending on sports marketing and its direct selling business.

Direct selling to consumers instead of through conventional retailers, along with innovation, is "driving strong momentum and balanced growth across our entire business," said chief executive Mark Parker.

Nike's results are the first since the company released an ad campaign this month featuring Kaepernick, the quarterback who has been essentially blacklisted by the National Football League over his civil rights activism.

Some critics took to social media to destroy their Nike garb over Kaepernick, who has been criticized by US President Donald Trump.

But many marketing experts consider the campaign a success and some data has shown an uptick in online sales since the spots were shown. The ad has been seen as a winner with non-white and younger consumers.

Shares of Dow member Nike fell 2.9 per cent in after-hours trading to US$82.61.

AFP