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Nike Reports Mixed 1Q18 Results

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Part 2
Nike Reports Mixed 1Q18 Results PART 2 OF 5

1Q18 Was Nike’s Slowest-Growth Quarter in the Last 7 Years

Nike’s top line grows at the slowest pace in the last seven years

Nike (NKE), which reported its 1Q18 results on September 26, posted a 0.1% YoY (year-over-year) rise in sales to $9.07 billion. The company fell short of Wall Street expectations by $18 million.

The current quarter was Nike’s slowest-growth quarter in the last seven years. Nike has been struggling against rising competition, especially from Adidas (ADDYY) in North America, and an overall slowdown in demand for sportswear products.

1Q18 Was Nike’s Slowest-Growth Quarter in the Last 7 Years

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Adidas recently overtook Jordan Brand (owned by Nike) and acquired the second spot in the US footwear market. According to the recent data from NPD Group, Adidas accounted for 11.3% of the US footwear market share, compared to Jordan Brand’s 9.5% share during the first eight months of 2017. Nike brand continued to dominate the US market with a 37% market share.

Nike’s North America revenue fell 3% during the quarter—its first sales decline in over four years. North America remains Nike’s largest market, and it accounts for 43% of its total sales.

Nike Brand continues to show momentum as Converse reported a sales decline

Nike Brand revenues grew 2% YoY in constant currency, driven by 19% growth in online sales and a 5% rise in sales comps. See the next part of this series to learn the key revenue drivers for the brand during the quarter.

Converse sales were down 16% YoY on both reported and constant-currency bases, as a high-double-digit increase in its China business was more than offset by a decline in North America sales due to planned supply tightening.

ETF investors seeking to add exposure to NKE can consider the SPDR Consumer Discretionary Select Sector ETF (XLY), which invests 2.6% of its portfolio in NKE.

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