[ad_1]
NIKE shares fell after the athletic-wear retailer forecast a drop in revenue early in its next fiscal year as it realigns its product offerings.
The world’s largest sportswear retailer expects revenue in the first half of the next fiscal year to be down low single digits, but sees revenue and earnings growing for the full year, minus the impact of an ongoing restructuring. It expects revenue in the fourth quarter of this year to be up slightly.
Nike is shifting its sneaker offerings as it tries to find sweet spots across categories. It will reduce the supply of classic shoes such as Air Force 1s and will dial back its Pegasus running shoes ahead of new product launches.
“We know Nike’s not performing at our potential,” chief executive officer John Donahoe said on a conference call with analysts. “It is been clear that we need to make some important adjustments.”
Shares fell 5.6 per cent at 5.45 pm in after-market trading in New York on Thursday (Mar 21). The stock had been down 7.1 per cent this year to the day’s close.
Nike reported sales for the quarter ended Feb 29 that were stronger than anticipated as the company ramps up a multiyear cost-cutting plan in the face of weaker demand for its sneakers and apparel.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The retailer had revenue of US$12.4 billion, higher than analysts’ anticipated, bolstered by better-than-expected sales in North America and Greater China. Nike’s sales in the crucial China growth market rose 4.5 per cent in the quarter. In North America, sales of US$5.07 billion were up 3.2 per cent.
Donahoe outlined a restructuring plan in December to cut US$2 billion in costs over the next three years in response to weaker sales. Nike said in February that it would slash 2 per cent of its global workforce as part of the plan, with layoffs to take place over two phases.
Donahoe said his priorities are to refocus on sports, develop more new products faster, boost sales with its wholesale partners and advertise more aggressively. Nike has pumped money into advertising to spur demand, spending US$1 billion on marketing in the quarter, up 10 per cent from the prior period.
Management has also been working to get rid of older merchandise to make room for fresh items after an inventory glut plagued the business last year. Inventories fell 13 per cent for US$7.7 billion for the quarter, a bigger decline than Wall Street predicted. BLOOMBERG
[ad_2]
Source link
