Nike posts loss due to tax law, but beats expectations
NEW YORK -- Nike reported its first quarterly loss in 20 years, due to a $2 billion tax expense related to recent changes in U.S. tax law. But the sneaker company's third-quarter results easily beat expectations and its shares jumped in after-hours trading.
It also addressed recently announced departures by high-level executives. CEO Mark Parker acknowledged that there were problems with the company's culture, but didn't provide any details.
"We became aware of some behavioral issues that are inconsistent with Nike's values of inclusively, respect, and empowerment," Parker said during a conference call Thursday with Wall Street analysts. "I'm committed to ensure that we have an environment where every Nike employee can have a positive experience."
Nike said last week that Trevor Edwards, its brand president who had been seen as a possible future CEO, was leaving the company in August. The Beaverton, Oregon-based company didn't say why. The Wall Street Journal reported that his resignation was announced to Nike employees in an internal memo that said the company had received complaints about inappropriate workplace behavior. A day later, it said a vice president had left the company, but didn't give a reason.
The leadership shakeup comes at a time Nike is trying to boost sales in North America, its biggest market. Nike is facing increasing competition in the region, especially from German sneaker company Adidas, whose sales have been rising in North America.
To try and boost sales, it signed a deal with online retailer Amazon last year, sold sneakers through social media app Snapchat, and has been launching its own apps as a way to sell more shoes. Still, North America sales fell 6 percent in the quarter, the company said Thursday.
It saw higher demand for its swoosh-branded goods outside the U.S., especially in China, where sales soared 24 percent. Overall, the company's revenue rose nearly 7 percent to $8.98 billion, topping Wall Street expectations.
It reported a loss of $921 million, or 57 cents per share, for the three months that ended Feb. 28, which the company said was due to the $2 billion tax expense. The last time it posted a quarterly loss was in 1998, according to financial data firm FactSet.
Earnings, adjusted for pretax expenses, were 68 cents per share. That beat the 52 cents per share Wall Street analysts expected, according to Zacks Investment Research.
Shares of Nike Inc., which closed at $64.42 on Thursday, jumped 6 percent in extended trading Thursday.
Parts of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on NKE at https://www.zacks.com/ap/NKE