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Nike

Nike leaves analysts stumped with weak sales forecast

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By Tony Connelly, Sports Marketing Reporter

March 23, 2016 | 2 min read

Nike has surprised analysts with an underwhelming growth forecast for the financial year, which led to its shares falling by as much as seven per cent.

Nike ends 2015 on a high

Analysts expected Nike to forecast sales increases between 10 and 15 per cent after a strong start to 2016, which saw it post a profit of $950m (£668m) with revenues rising nearly eight per cent to $8bn.

However the sportswear giant said it expects sales to increase by a high single digit percentage and for overall earnings to be in the low teens in the fiscal year ending May 2017. The lower than expected estimation resulted in shares falling by as much as seven per cent in the hours after trading.

The tepid sales prediction stems from Nike’s overseas sales being eroded by the impact of a strong dollar and other currency fluctuations. Consumer spending is also a factor, with analysts concerned that people are spending less due to a weaker global economy.

Asia continues to be a flourishing market for Nike though and the company’s growing popularity in the region saw it increase its year-on-year net profit for the three months ending November by 20 per cent.

This was helped by strong performance on its ecommerce platform, which saw huge sales increases for its footwear, clothes and athletic equipment over the Lunar New Year period. This is likely to be an accelerating medium for the company after it invested heavily in strengthening its ecommerce platform in a bid to meet its ambitious sales target of growing ecommerce sales from $1bn to $7bn by 2020.

Innovation is a focus for the brand with new technology-infused products being unveiled including its new self-lacing shoe.

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