Nike Margin Forecast Unchanged as Winter-Wear Demand Drops
Nike Inc. (NKE), the world’s largest sporting-goods maker, hasn’t changed its forecast for gross margin after warm weather in North America slowed demand for winter wear products across the industry, an executive said.
“We all read the same-store reports, and there is some concern if you are big into the winter business and outerwear,” Charlie Denson, president of the Nike brand, said today in an interview in New York. “Our business continues to be very good.”
One of the warmest winters of the past 50 years in North America has crimped demand for coats and apparel used for exercising outdoors, prompting some retailers to offer large discounts to sell the goods. Nike sells a line of gloves, pants and jackets for outdoor workouts.
The company has been maintaining profit growth amid higher costs for raw materials and labor by increasing sales and raising prices. The Beaverton, Oregon-based shoemaker is starting to push through much of its price increases this month, Denson said.
Gross margin, or the percentage of sales left after the cost of goods sold, has narrowed for three straight quarters. The company forecasts a decline of 1.5 percentage points for the three months ending Feb. 28.
Denson was in New York for the release of the Nike FuelBand, a wristband that tracks daily activity by measuring oxygen use and can display data, such as steps taken, on a smartphone application. Nike will begin taking orders today for the device that sells for $149 through its U.S. website.
While the company doesn’t expect the band to sell like one of its popular shoes, Nike hopes it will push people to increase the time they spend interacting with the brand, Denson said.
“This is not a sprint,” Denson said. “This is a long- term commitment to making you a better athlete.”
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