Investors in Nike Inc. (NKE.N), beset by a misconduct scandal that burst into public view last week, are taking comfort from a turnaround at its ailing North American business.
Though sales in the region declined for a third straight quarter, Chief Executive Officer Mark Parker said the picture brightened by the end of the latest period. New products and an improved customer experience are helping win back customers, he said in a statement.
“We now see a significant reversal of trend in North America,” Parker said.
The results help send the shares up as much as 5.3 per cent to US$67.85 in late trading. The stock had climbed 3 per cent this year through Thursday’s close.
The world’s biggest sports brand has spent a year trying to regain its foothold in its biggest market after an overly ambitious revenue target -- US$50 billion by 2020 -- led to a buildup of U.S. inventory. The slump was worsened by store closures, competition from Adidas AG, and a fashion shift away from Nike’s strengths -- like basketball shoes.
Now the company says it’s back on the upswing. Earnings also topped analysts’ estimates last quarter. Excluding some items, profit amounted to 68 cents a share, compared with an average prediction of 53 cents.
Chinese Growth
The company’s business overseas remained strong, with China growing 19 per cent, excluding currency effects. Total revenue came in at almost US$9 billion, outpacing the estimate of US$8.85 billion.
Nike disclosed last week that it was reviewing allegations of improper conduct at the apparel giant. The news accompanied the abrupt resignation of two high-profile executives.
Trevor Edwards, president of the Nike brand and once seen a likely successor to the 62-year-old Parker, stepped down from the role and will retire in August. And one of his direct reports, Jayme Martin, left the company last week.
Nike said this week that it acted swiftly when it heard of behavior problems among managers and executives.
“We take these issues very seriously and we were disturbed and saddened to hear of them,” Greg Rossiter, a spokesman for the company, said on Wednesday. “We are committed to a culture that reflects our values and are taking steps so that all our employees have a positive experience built on respect, inclusivity and empowerment.”
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