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Nike Continues to See Strong Growth Prospects in China

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Revenue growth by region

Nike’s (NKE) revenues grew 4% on a reported basis to $10.18 billion in the fourth quarter, which ended on May 31. The company’s revenue growth was 10% on a currency-neutral basis. The Greater China division experienced double-digit growth for the 20th consecutive quarter.

China continued to be a significant growth driver for Nike in the fourth quarter. Nike’s revenues from Greater China rose 15.6% to $1.70 billion driven by double-digit growth across all three product categories—footwear, apparel, and equipment. The region’s revenues grew 22% on a currency-neutral basis.

The company’s digital revenues rose 37% in Greater China in the fourth quarter due to the sneakers app and the strength of strategic partnerships with Tmall and WeChat.

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Despite trade tensions between the US and China, Nike expects the strength in its China business to continue in fiscal 2020. Nike intends to focus on product innovation with Chinese consumers’ preferences in mind. Nike is also geared up to launch its Nike app in China in the first half of fiscal 2020.

Momentum in North America

Nike’s revenues from the North America region grew 7.5% to $4.17 billion in the fourth quarter. The growth rate marked an improvement compared to the 6.7% rise in the third-quarter revenues. Nike’s performance in the region was driven by growth in digital sales and strong share gains with wholesale partners like Foot Locker and Dick’s Sporting Goods.

Performance of other regions

Nike’s revenues from the EMEA (Europe, the Middle East, and Africa) region were almost flat on a reported basis at $2.46 billion. The region’s revenues grew 9% on a currency-neutral basis. Digital sales grew 35% in the region in the fourth quarter. Nike plans to leverage the mobile channel by launching its Nike app in 13 additional EMEA countries in the current fiscal year.

Nike’s revenues from the Asia-Pacific and Latin America region fell 4.0% to $1.38 billion due to currency headwinds. The region’s revenue growth was 9% on a currency-neutral basis. The company expects strong digital sales in the region driven by partnerships with popular companies including ZOZOTOWN and Flipkart. Nike is also looking forward to expanding the presence of its own app in the region.

Overall, Nike aims to boost its revenues through innovation, digital sales growth, and a focus on women’s categories across all of its geographies.

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