Nike's stock soars following strong sales performance in US and China

US and China Strength Support Rise in Nike Sales

The most recent sales report from Nike Inc. surpassed expectations, marking a strong period for the global sportswear leader despite concurrent efforts to manage costs in response to decreasing demand for the company's footwear and clothing items.

Thanks to unexpected boosts in sales from North America and Greater China, Nike reported a quarterly revenue (ending February 29) of $12.4 billion. Specifically, the quarter saw a sales increase of 4.5% in China (a key growth market for the company), while North America sales rose by 3.2%, totaling $5.07 billion.

In the face of these sales tendencies, CEO John Donahoe announced a restructuring plan, first outlined in December, designed to cut costs by $2 billion over the next three years. Included in this plan, as disclosed in February, is a move to cut 2% of its worldwide workforce in two phases. "We are making the necessary adjustments to drive Nike's next chapter of growth", stated Donahoe.

Part of these adjustments entails clearing out dated merchandise to make way for newer stock following an inventory surplus that affected business during the previous year. This move was successful as inventories declined by 13%, reaching $7.7 billion for the quarter, an even larger decrease than Wall Street anticipated.

Nike has also invested significantly in marketing, allocating a $1 billion budget for advertising in the current quarter, representing a 10% increase from the previous period.

Following the release of this news, after-market trading in New York on Thursday saw a 1.1% rise in shares. This is a positive change considering the stock's 7.1% decrease for this year up until market's close.