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Nike Inc.

Nike develop new products, outruns earnings predictions

Charisse Jones
USA TODAY
Nike released its latest earnings report on Tuesday. i

Nike proved to be fleet-footed again in its third quarter, beating earnings estimates on the strength of strong sales despite a shrinking base of sporting goods chains.

“The power of Nike's diverse, global portfolio delivered another solid quarter of growth and profitability,'' Mark Parker, Nike's CEO said in a statement.

Net income jumped 20% to $1.1 billion during the three-month period vs. $950 million in the same quarter last year. Diluted earnings rose 24% to $0.68 per share in the quarter that ended Feb. 28, far surpassing analyst estimates of 52 cents per share, according to S&P Global Market Intelligence.

Diluted earnings outpaced revenue because of a range of factors including a lower tax rate, and leveraging of administrative costs, the company said.

The sneaker and athletic apparel giant has maintained strong sales even as it faces increased competition from rivals like Under Armour and several of the sports goods chains that stock its goods close stores and in some cases,  go out of business.

Parker acknowledged the forces roiling retail in a call Tuesday with investors, noting an emphasis on discounting, and a declining number of shoppers visiting actual stores. "The consumer has decided digital isn't just part of the shopping experience,'' Parker said. "Digital is the foundation of it.''

To that end, the company is focusing on delivering products to market "in weeks, not months,'' and ramping up personalized service. That includes increasing the number of consumers utilizing the Nike app, catering to customers at specialized shops like Manhattan's Nike Soho where shoppers can try out products and join running clubs, and offering a Nike-branded experience at retailers like Foot Locker and Dick's.

The sports giant says it is trying to keep its products cutting edge.  Last year, it unveiled the first self-lacing sneakers. And Tuesday Nike said it's using technology to enhance the performance of its running and basketball shoes, and rolling out three new sneaker cushioning platforms in the coming months.

But while Nike tries to innovate, some of the stores that sell its sneakers and athletic garb have struggled to keep pace with online retailers, going into financial free fall.

At least ten sporting good chains have sought bankruptcy protection in the last year and a half, according to bankruptcy research source Reorg First Day. Gander Mountain became the latest, saying this month that it will begin closing 32 stores in 11 states over the next several weeks, potentially affecting at least 1,280 full and part-time workers.

Several other chains have shut their doors. They include Sports Authority, once the second biggest sports retail company in the U.S., golf equipment giant Golfsmith and Sport Chalet, a southern-California-based chain which closed in 2016 after operating for 57 years.

Nike shares dropped 1.72% to $57.01 in after hours trading.

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