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Nike’s gross margins fall

Nike has reported its weakest quarterly sales growth in nearly seven years.

Nike still gets about 70 per cent of its revenue from retail customers but has been investing heavily in e-commerce, partnering with Amazon and offering heavy discounts on its own website. The company is building up more stock to sell through online channels but may also indicate lower sales through traditional outlets. Gross margins fell 1.8 per cent to 43.7 per cent, pointing to greater discounting in a market Nike warned would shrink overall in the current quarter as more stores shut.

Nike expects challenges to remain in North America for at least several more quarters.

Analysts from some of the world’s major brokerages remain upbeat on the company’s plans to invest in a variety of different distribution channels but say it will happen too slowly to offset the growing battle for market share.

European rival Adidas has continued to snap at Nike's heels, even if the latter's North American business is still more than three times larger. Both face growing competition from others including Under Armour.

US sports good chains have been shutting stores and cutting prices as fewer shoppers visit malls and online shopping grows.

 
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