Nike beats quarterly earnings estimates as newer styles, discounts draw customers

By Ananya Mariam Rajesh

(Reuters) -Nike beat Wall Street estimates for third-quarter revenue and profit on Thursday, on the back of holiday season discounts and newer sneaker launches to draw back customers amid rising competition from brands such as On and Decker's Hoka.

Shares of the world's largest sportswear maker, which had fallen 7.2% in 2023, were up over 4% in extended trading.

Nike recently launched the Ultrafly trail running shoe and is heavily investing in its Vomero 5 and V2K Run sneakers, to capitalize on the growing interest in the running category from shoppers.

Newer brands such as On, New Balance and Hoka have been taking away market share from the world's largest sportswear company due to to innovative performance shoes such as On Running's Cloudflow 4 and Hoka's Clifton 9 and Bondi 8, which have thick foam soles that are resonating with customers.

Nike reported a 3% jump in North America, its largest market, and a 5% rise in Greater China, as heavy promotions on its Jordan shoes attracted customers during the all-important shopping season.

Its wholesale business, which had been suffering for the last few quarters after retailers cut back on orders, bounced back and saw a 3% rise in the third quarter.

The company's quarterly profit of 77 cents per share topped estimates of 74 cents on the back of job cuts and its cost savings plan.

Nike announced in February it would cut about 2% of its total workforce, or more than 1,600 jobs, and in December outlined a $2 billion savings plan which included reducing the supply of underperforming products and improving its supply chain.

The world's largest sportswear maker said revenue rose 0.3% to $12.43 billion, beating LSEG estimates of $12.28 billion.

"There's nothing here that shows there is anything unusual in the quarter...as far as what this means for the company's turnaround...it doesn't mean much because the company is in a restructuring situation but it's really only started," said David Swartz, analyst at Morningstar.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Krishna Chandra Eluri)