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Nike Q3 sales flat on plummeting Converse revenues, slowing growth across Asia Pacific

Nike Inc. said revenues were slightly up to USD 12.4 billion for the third quarter, coinciding with single-digit gains in Asia Pacific and Greater China.

SEE ALSO: Nike sees Asia revenues rally on APAC growth, reveals USD 2-billion cost-saving plan

The U.S. sportswear giant said Nike brand sales were USD 11.9 billion, up 2 percent on a reported and currency-neutral basis, as currency-neutral growth in North America, Greater China and Asia Pacific Latin America (APLA) was offset by declines in Europe Middle East Africa (EMEA).

Converse sales, however, plummeted 19 percent to USD 495 million on a currency-neutral basis, primarily due to declines in North America and Europe.

Revenues in Greater China grew 5 percent on a reported basis to USD 2.08 billion, with footwear sales up 5 percent, equipment sales up 9 percent, and apparel sales surging 10 percent.

APLA sales grew 3 percent to USD 1.65 billion during the quarter, on the back of a 19 percent surge in equipment sales, partially offset by a 5 percent increase in footwear and a 3 percent decrease in apparel sales.

For the three months ending February 29, net income was USD 1.2 billion, down 5 percent, and diluted earnings per share were USD 0.77, decreasing 3 percent.

“We are making the necessary adjustments to drive Nike’s next chapter of growth,” said John Donahoe, president and CEO, Nike, Inc.

“We’re encouraged by the progress we’ve seen, as we build a multiyear cycle of new innovation, sharpen our brand storytelling and work with our wholesale partners to elevate and grow the marketplace.”

In December last year, the company revealed plans for USD 2 billion in cumulative cost savings over the next three years. Areas of potential savings include simplifying product assortment, increasing automation and use of technology, and leveraging scale to drive greater efficiency.

At the time, Nike said a majority of the savings will be invested to fuel future growth, accelerating innovation at speed and scale, and driving greater long-term profitability.

As part of this commitment, the company said is taking steps to streamline the organisation, which is expected to result in pre-tax restructuring charges of approximately USD 400 million to USD 450 million that will largely be recognised in the third quarter, primarily associated with employee severance costs.