March 22, 2018 / 8:30 PM / 4 months ago

Nike forecasts reversal in North America sales decline, tops estimates

(Reuters) - Nike Inc (NKE.N) on Thursday signaled an end to revenue declines in North America as the world’s largest footwear maker reaps the benefits of its efforts to sell directly to customers and focus on new launches.

FILE PHOTO: The logo of Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson/File Photo

The company said it expected revenue in North America to be flat in the fourth quarter and return to growth in the first half of fiscal 2019.

Shares of the Dow component rose about 3 percent in extended trading. They had closed down 3 percent at $64.42 in regular trading on reports that William Ackman’s Pershing Square had exited the company with a profit of about $100 million.

“As we close Q3, we now see a significant reversal of trend in North America,” CEO Mark Parker said in a statement.

North America has been a weak spot for Nike as the company battled tough competition from a resurgent Adidas (ADSGn.DE) and as the bankruptcies of sporting goods retailers Sports Authority and Sports Chalet weighed on its supply chain.

Revenue in the region has declined for three straight quarters, including a 6 percent drop in the latest quarter.

In response, Nike has pivoted toward selling directly to customers and has partnered with Amazon.com Inc (AMZN.O).

Nike is also banking on its strength in innovation.

With more innovation in the Nike Air range, Parker said on a post-earnings call that he expected to grow the business by “several billion dollars over the next few years.”

“The greater scale of these platforms will create greater impact on our business into Q4 and beyond.”

The company’s international business continued to perform well, with all three regions reporting growth in the third quarter.

China sales jumped 24.3 percent and the company plans to maintain the momentum through the launch of NikePlus membership in the Asian country in the first quarter of fiscal 2019.

Nike reported a net loss of $921 million, or 57 cents per share in the three months ended Feb. 28, compared with a profit of $1.14 billion, or 68 cents per share, a year earlier.

The company recorded a one-time charge of $2 billion in the reported quarter related to the recently enacted U.S. tax law.

Excluding the charge, the company earned 68 cents per share, beating expectations of 53 cents.

Revenue rose 6.5 percent to $8.98 billion, also above estimate of $8.85 billion, according to Thomson Reuters I/B/E/S.

Reporting by Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila

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