(Reuters) – Nike Inc’s (NKE.N) quarterly revenue and profit blew past Wall Street expectations on Thursday on strong sales in China, but lower-than-expected growth in North America, its biggest market, overshadowed the beat.
FILE PHOTO: The logo of Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson/File Photo
The world’s largest footwear maker faces intense competition from brands like Adidas (ADSGn.DE), Skechers (SKX.N) and VF Corp’s (VFC.N) Vans in North America, even as it pushes to sell exclusive merchandise through its tap-and-buy SNKRS app and retail stores.
In its attempt to gain market share over rivals, Nike has collaborated with celebrities, ramped up sneaker launches and increased marketing around major sporting events.
In November, the company ended a two-year-old partnership with Amazon.com Inc (AMZN.O) to sell Nike’s merchandise directly on the online retailer’s website, to focus more on sneaker launches on its own digital platforms.
Nike’s revenue from North America rose 5.3% to $3.98 billion in the second quarter, compared with the previous year’s 9% rise, but missed Wall Street expectations of $4 billion.
“The comparisons are getting tougher in North America. It’s partially that – this recovery for the Nike brand started last year and it really accelerated (that time),” Telsey Advisory Group analyst Cristina Fernandez said.
The company’s gross margin of 44% was also slightly below estimates of 44.1%, hurt by higher product costs due to incremental tariffs in North America.
Nike’s shares, which hit a record high in regular trading on Thursday, were down about 2% after the closing bell. They have risen 36.4% this year, outpacing the 22% gain in the blue-chip Dow Jones index .DJI.
In Greater China, the fastest-growing market for Nike, revenue rose 20% to $1.85 billion. The company recently introduced its app in the country, which outgoing Chief Executive Officer Mark Parker said on Thursday was downloaded 1 million times.
Nike’s net income jumped 31.6% to $1.12 billion, or 70 cents per share, in the quarter ended Nov. 30, while analysts on average had expected 58 cents per share.
Overall revenue rose 10.2% to $10.33 billion, beating the average analyst estimate of $10.09 billion, according to IBES data from Refinitiv.
Reporting by Nivedita Balu in Bengaluru; Editing by Maju Samuel