Nike recorded a 30% increase in greater China sales for the last three months, coming as a surprise from an economy hitting a rough patch. Nike called the results in China fantastic.
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But analysts said the worst period was over, and the whole industry started rebounding with sales growth a year ago, with global leaders like Nike maintaining market share and home-grown brand Anta growing to be the domestic leader.
The sportswear firm said it’s “very mindful” the economy there is volatile, but reckons its marketplace “has never been more healthy”.
Shares of Nike (NKE) jumped in premarket trading Friday after the company reported a 23 percent boost in fiscal first-quarter profit, topping Wall Street expectations.
Nike has benefited from cultural trends that favor its products, including the rise of athletically styled footwear and clothes among consumers that aren’t necessarily planning a workout.
The push drove a 90 basis-point increase in gross margins to 47.5% in the first quarter ended August 31. Despite a slowdown in China, the country’s contribution to Nike’s overall performance was huge as in China alone, it posted sales of $886m, up 30% and profits rose 51% to $330m. The company credited the increase to higher average selling prices and continued growth in the more profitable direct-to-consumer business.
The company has also managed to gain traction among younger customers by leveraging social media and its mobile apps.
Brian Yarbrough, analyst at Edward Jones stated that Nike was able to get ahead of its rivals due to Investments in product innovation and gathering feedback and data on customers’ fitness activities, calling the first quarter results “extremely impressive”.
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It has been also reported that the company’s increased focus towards health and the launch of sports-centered apps are other factors that contributed to its market in China. Nike brand saw the largest sales growth, of 15 percent, to $7.9 billion. In North America, where Nike dominates the market, Nike brand sales grew 9% excluding currency impacts.
