Nike profits rebounds riding on increased basketball business

Company - Himanshu Gill - Dec 21,2016

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nike profits rebounds riding on increased basketball business

Nike, the world’s largest sportswear manufacturer, recorded profits much more than expected riding on a rebound in its basketball gear business.

Profits for the previous quarter, ending November, rose by 7.3 percent to $842 million, while revenue surged by 6.4 percent to $8.18 billion. The company’s shares went up by 1.7 percent at $52.67 in after-market trading this week. The Wall Street had projected $8.09 billion revenues for the company that it surpassed easily. Also, earnings per share were 50 cents, above the 43 cent estimate.

Nike’s stock had gone down by 18 percent earlier this year as rivals like Under Armour and Adidas took away its customers. The company was stumbling when it decided to redesign its basketball products and delivered them at revised prices, such as the Jordan 31 and Kobe A.D. Nike's basketball category and the Jordan brand accounted for about 15% of Nike's wholesale revenue in 2016.

Trevor Edwards, president of the Nike Brand, said that the company is experiencing an incredible momentum in basketball and expects to grow in a similar way until the half of 2017.

Nike executives also repeatedly emphasized that its revenue forecast was a much more comprehensive reflection of its outlook than the futures orders, an indicator that the Wall Street analysts and other investors focus on. The company stopped issuing its futures orders forecast in its earnings release that began in the last quarter.

Nike's sales in North America, its biggest market, rose 3% in the second quarter and were up 12% in Greater China.
Nike isn’t the only one benefiting from the greater interest in sportswear among consumers. Lululemon Athletica, earlier this month pleased investors with a strong quarterly report, while German-based Adidas is rebounding in North America. Under Armour’s sales are still increasing since it is being endorsed by top NBA star Stephen Curry.