Sportswear brand Nike has surpassed analysts' expectations for Q2 as North America sales offset a plunge in China.
However, the company’s shares fell more than 9% in after-hours trading as investors weighed weaker demand in China and the ongoing impact of higher tariffs on Nike’s business.
Revenues for the quarter were up 1% to US$12.4 billion, beating expectations US$12.22 billion.
This was offset by revenue in Greater China falling by 17% to US$1.42 billion.
Sales in North America rose 9% to US$5.63 billion and helped boost wholesale revenues to US$7.5 billion. This marks an 8% increase in wholesale revenues from the previous quarter.
However, direct sales, which were a key focus for Nike before the current CEO took over, fell 8% to US$4.6 billion.
Revenues for sneaker brand Converse also saw a drop of 30% to US$300 million. This continues a downward trend as its revenues dropped 27% in the previous quarter.
Despite this, revenue in its Greater China market fell by 17% to US$1.42 billion.
While earnings per share fell 32% to 53 cents, this still topped analysts' expectations of 38 cents.
Net income also fell 32% to US$0.8 billion.
Nike President and CEO Elliot Hill said the company is still in the “middle innings” of its comeback.
“We are making progress in the areas we prioritised first and remain confident in the actions we're taking to drive the long-term growth and profitability of our brands," he said.
“We're finding our rhythm in our new sport offence, and setting ourselves up for the next phase of athlete-centred innovation in an elevated and integrated marketplace."
The company has been experiencing pressure from tariffs, announcing that its gross margin dropped by 3 percentage points and inventories fell 3%.
A the time of writing, Nike (NYSE: NKE) stock fell 0.09% to US$65.63 before slumping 9.69% in extended deals. Its market cap is US$97.01 billion.
Nike stocks have also fallen 15.84% over the past year.
