Flat wholesale business and heavy promotions led to Nike’s U.S. sales to drop in the first quarter.
The athletic footwear company reported Tuesday that Q1 profits were better than expected. However, despite efforts to reduce costs, net income was down to $950 million from $1.24 billion in the quarter. Diluted earnings sank 22 percent to 57 cents per share from 73 cents during that same period a year ago.
According to CNN Money, Nike’s U.S. sales declined three percent from one year ago. North America accounts for more than 40 percent of the brand’s total sales.
Total revenues for the Nike Brand were $8.6 billion, up 2 percent on a currency-neutral basis driven by growth in Greater China, Middle East and Africa and Asia Pacific and Latin America, including growth in the sportswear category.
Revenues for Converse were $483 million, down 16 percent on a currency-neutral basis, mainly driven by declines in North America.
“This quarter, we captured near-term opportunities through our new Consumer Direct Offense,” said Mark Parker, Nike Inc. chairman, president and CEO. “Looking ahead to the rest of fiscal 2018, we will ignite Nike’s next horizon of global growth through the strength of our brand, the power of our innovative products and the most personal, digitally-connected experiences in our industry.”
The company’s first-quarter results and restructuring strategy have done little to quell investors’ concerns. On Wednesday, Nike shares fell more than 3 percent.
“Expectations were incredibly low going into this quarter, and it’s really a back half story here,” SW Retail Advisors’ Stacey Widlitz told CNBC‘s “Closing Bell” on Tuesday.
“We’ve heard from just about everybody in this space … that things have decelerated in the footwear space,” she added. “That means wholesale is going to be incredibly promotional this Q4. And yes, Nike is doing its best to pull out of the unhealthy channel, but three-quarters of their business is still exposed to wholesale here.”