Home Business Nike Posts Strong Sales, Plays Down Trade Risks – Wall Street Journal

Nike Posts Strong Sales, Plays Down Trade Risks – Wall Street Journal

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Shoppers look at shoes at a Nike store in Miami Beach, Fla.


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NKE 1.34%

posted higher sales in the latest quarter, boosted by strong demand in both the U.S. and China, and executives said the trade dispute between the two countries hasn’t hurt the sneaker giant’s business.

“We have not seen any impact on our business to date, and we continue to see strong momentum,” Nike Chief Executive Mark Parker said in a conference call Thursday.

The Trump administration boosted tariffs on $200 billion of Chinese imports to 25% in May. It has threatened to impose new tariffs on an additional $300 billion in Chinese imports, including footwear. President Trump will meet this week with Chinese leaders at the G-20 summit to renew trade negotiations.

Nike, which doesn’t own factories, produces about 25% of its global apparel and footwear in China. But executives said the company can source from factories in other countries to mitigate any potential tariffs for the U.S. market.

“While it is certainly dynamic out there with respect to trade, we’re relatively well positioned,” Mr. Parker said.

For the company’s fourth quarter, total sales rose 4% to $10.18 billion. Revenue in the North American market, which accounts for the majority of total sales, rose 7% to $4.17 billion. Sales in China climbed 16% to $1.7 billion.

The Beaverton, Ore.-based company reported a profit of $989 million, or 62 cents a share, compared with $1.14 billion, or 69 cents a share, a year ago. Profits were hurt by spending on new technology and a higher tax rate than a year ago.

Nike has used its digital apps to expand online sales and reduce its reliance on traditional stores. In fiscal 2019, digital sales jumped 35% after Nike invested over $1 billion in its apps and other capabilities during the year, Mr. Parker said. He expects digital transactions to comprise at least 30% of Nike’s business by 2023.

For the new fiscal year, the company reiterated its previous financial forecasts, which call for revenue, excluding currency swings, to rise by a high-single-digit percentage. On that basis, revenue rose 7.5% in fiscal year that ended May 31.

“We expect another year of broad-based growth with all four geographies delivering on our long-term financial model,” finance chief Andrew Campion said. He said the company faced increased pressure on profit margins from currency swings and spending on supply-chain projects, such as adding RFID tags to every product.

For the first quarter, Nike forecast reported revenue-growth in line to slightly above the fourth quarter, when revenue rose 4% from the year earlier.

Shares of Nike, which are up 13% this year, rose 1.3% to $83.66 in after-hours trading on Thursday.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Patrick Thomas at Patrick.Thomas@wsj.com

Appeared in the June 28, 2019, print edition as ‘Nike’s Sales Get Boost From China.’

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