Nike optimistic for sales rebound in North America

Thu Jul 21, 2016 8:31am EDT
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By Emma Thomasson

BERLIN (Reuters) - Nike Inc (NKE.N: Quote) expects sales growth to recover in North America after a weak March-May quarter, helped by the upcoming Olympics, an expansion of its basketball business and clearing excess stock, brand chief Trevor Edwards told Reuters.

The world's biggest sportswear maker last month reported flat sales in its home region for its fiscal fourth quarter, its worst performance for over six years amid strong competition from Adidas (ADSGn.DE: Quote) and Under Armour (UA.N: Quote).

However, Edwards said he was hopeful for an improvement for the current fiscal year ending May 2017, after the company managed to shift excess stock, adding Nike also expected a boost from next month's Olympics in Rio.

"We did face supply chain challenges last year, but the full-price channels in North America are now clean," Edwards said in emailed answers to questions from Reuters, referring to new stock that would not have to be discounted.

"Our brand remains incredibly strong in North America and we expect growth will accelerate in this geography over the balance of the fiscal year."

Nike makes just under half of its revenues in North America.

However, Susan Anderson, an analyst at FBR Capital Markets & Co., said recovery could take time as Nike still had to shift excess inventory from its outlets or discounters like T.J. Maxx.

"I'm skeptical because we saw a pretty big slowdown in North America last quarter, so for it to flip around so quickly usually does not happen," she said.   Continued...

An Air Max  shoe made by Nike Inc is shown in this illustration photograph taken in Encinitas, California, U.S. June 27, 2016.        REUTERS/Mike Blake