Margins decline for Nike, but growth in China

Footwear giant Nike Inc lost traction in its first quarter to the end of August, its gross margin declining 180 basis points to 43.7 per cent.

It attributes this mainly to unfavourable currency exchange rates and, to a lesser extent, more discount sales.

Sustained revenue growth in international markets, particularly China, was offset by an expected decline in North America wholesale revenue.

Chairman/president/CEO Mark Parker says the group captured near-term opportunities during the quarter through its new company alignment, simplifying its geographical structure from six regions to four – North America; Europe, Middle East and Africa (EMEA); Greater China; and Asia Pacific and Latin America (APLA).

Nike’s revenues at $9.1 billion were flat on both a reported and currency-neutral basis.

Revenues for the Nike brand were $8.6 billion, up 2 per cent, driven by growth in Greater China, EMEA and APLA, as well as growth in sportswear. Converse revenues, at $483 million, were down 16 per cent.