Nike enjoying ‘amazing’ sales in China

A lot of global retailers were hit hard because of the slowing economic growth in the second-largest economy in the world, but the footwear company claimed that their sales in the China were fantastic, BBC learned.

Not only did sales increase, its gross margin also increased 0.9 % to 47.5 %, which resulted in a 1.2 billion dollar (1.1 billion euro) net profit, up 23 % to last year’s first quarter.

Nike Inc.’s sales rose a better-than-expected 5% in the August quarter, boosted in part by higher average selling prices and strength in its China business.

The company’s revenue increased 5.4 percent to $8.41 billion – again – defeating the average of $8.22 billion the analysts expected, as per Thomson Reuters I/B/E/S. Analysts forecast a much lower contribution to Nike’s profit from China. The company has worked with wholesale partners in the region to remodel how products are displayed to customers.

“While we are very mindful of the macroeconomic volatility in China, our brand has never been stronger and our marketplace has never been more healthy”, Andy Campion, Nike’s chief financial officer, said on an earnings call after the results.

Futures orders also grew 27 percent in China versus analysts’ estimates of a 15.8 percent rise. Futures orders are closely watched by investors as a benchmark for demand for Nike products. Through Thursday’s close, the stock had risen 42% over the past 12 months. Sales in China rose 30% to $886 million. Clearance of this excess inventory could tamp down margin growth for the next two quarters, the company said.