Demand strong, margins better in 2012: Nike CEO
NEW YORK (Reuters) - Nike Inc (NKE.N) is seeing no slowdown in demand in its biggest markets, even as Europe struggles economically and shoppers in the United States remain skittish, Chief Executive Mark Parker said.
The world's largest sportwear maker saw sales rise 18 percent in the second quarter, and Parker said there has been no pushback from shoppers as it raised prices for spring products.
"During times of economic challenge, consumers will go to brands that they trust and can connect with. We have not seen the economy have a dramatic impact on the sales of our products, not just in the high end, but also in the mid-priced range," Parker said.
Speaking at the launch of the company's new FuelBand, Parker said he expects input costs to keep going up, and is planning to fight those partially with price increases to improve margins.
Gross margins, which were down 260 basis points during the second quarter, are expected to improve through fiscal 2012, the CEO said.
"We definitely see room for margin improvement. With the price increases and with some commodity costs coming down, margins will start climbing up by the end of this fiscal year. You'll start seeing incremental margin improvement in fiscal 2012 and as we head into 2013," said Parker, who has been working with Nike since 1979.
Nike is also betting heavily on its Chinese market, which is currently about 11 percent of total sales, and grew 35 percent during the quarter ended Nov 30.
"I frankly think we have only scratched the surface when it comes to China," Parker said.
"(Over the next five years) the rate of growth may go up or down a little bit, but China will stay a growth story," he said.
(Nivedita Bhattacharjee in New York; editing by Mark Porter)