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Nike’s North America Sales Weaken As Execs Look for Innovation Cure

Nike Inc. leans on international sales to compensate for challenges at home and preps a slate of new products to break the malaise.

In a nutshell: Nike is in a rut in North America. Growth for the Beaverton, Oregon-based company was led by international markets as North America sales declined for the second straight quarter. The brand finds a glimmer of holiday hope in its Nike Direct business, which continues to outpace its wholesale marketplace.

Sales: Sales for Nike Inc. ending Nov. 30 increased 5 percent to $8.6 billion. Revenues for the Nike Brand were up 4 percent to $8.1 billion, driven by EMEA, Greater China and Asia Pacific regions and growth in the sportswear and Nike Basketball categories. Sales for Converse were $408 million, down 4 percent as international growth was more than offset by declines in North America.

Earnings: Net income dipped 9 percent to $767 million as a decline in gross margin and higher selling and administrative expense more than offset revenue growth and a lower tax rate.

CEO’s Take: “This quarter, led by our Consumer Direct Offense, we accelerated international growth and built underlying momentum in our domestic business,” said Mark Parker, Nike Inc. chairman, president and CEO. “For the back half of the fiscal year, Nike’s innovation line-up is as strong as it’s ever been and we’ll continue to actively shape retail through new differentiated experiences.”

On a conference call with analysts, Parker added: “We’re entering the second half of the year with a wave of new products and concepts. Consumers want fresh, innovative products, and they want choice, and right now, our innovation cycle is delivering against those demands.”