December 20, 2018 / 9:31 PM / in a month

North America, online sales power Nike's quarterly results beat

(Reuters) - Nike Inc’s (NKE.N) quarterly results beat Wall Street estimates, boosted by strength in North America where new launches led to higher sale of more full-priced footwear and apparel online, sending its shares up 7 percent on Thursday.

A Nike Running store is pictured in Pasadena, California U.S., March 21, 2017. REUTERS/Mario Anzuoni

For more than a year, Nike has been speeding up the pace of new product launches and expanding partnerships with online retailers, which helped drive a more than 30 percent rise in digital sales in its home market.

Overall online sales rose 41 percent in the quarter.

A ramp up in its supply chain to bring fresh fashion faster to stores also helped the world’s largest sportswear maker take more market share from German rival Adidas AG (ADSGn.DE) in North America.

In November, Nike opened doors to a new flagship store in New York’s Fifth Avenue, a six-storey building where customers can choose sizes and pay for products just using the Nike app.

The company is also working toward launching cheaper versions of its auto-lacing sneakers, inspired from the movie “Back to the Future”.

Analyst Daniel Martin at D.M. Martins Research said the company’s better supply chain management has helped it overcome higher product costs. In the reported quarter, cost of sales rose 8 percent.

In North America, its biggest market, Nike’s new strategies led to an 8.5 percent rise in revenue in the second quarter.

“It’s clear that the consumers are craving experiences and the fastest way to meet that demand is to test, learn and scale new features,” Nike’s Chief Executive Officer Mark Parker said on a post-earnings call with analysts.

Even in China, where investors were worried about its growth due to the ongoing tariff war with the United States, revenue expanded 26.4 percent in the quarter.

2019 FORECAST

For 2019, Nike said excluding fluctuations in exchange rates, it expects stronger revenue growth than previously planned.

Chief Financial Officer Andy Campion sees revenue for the full year to grow in the high single-digit range, “potentially approaching low double digits”.

Total revenue for the maker of Jordan sneakers rose 9.6 percent to $9.37 billion in the second quarter. Net income rose to $847 million, or 52 cents per share, in the quarter ended Nov. 30.

Analysts on average expected Nike to earn 46 cents per share on revenue of $9.18 billion, according to IBES data from Refinitiv.

Nike shares, which have lost about 18 percent in the last three months, jumped to $72.09 after the bell.

Reporting by Nivedita Balu and Uday Sampath in Bengaluru; Editing by Arun Koyyur

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