Beaverton, Oregon – Nike had $5.6 bn sales in its footwear division in the third quarter of 2018, up $219 m or 5% from the equivalent 2017 period.
Nike makes loss in Q3 through tax change
Tax changes in the US hit the firm, which made a loss in the quarter.
Across Nike, revenue was up 3% compared to the third quarter o 2018 and reached $9bn. This was driven by sales in Greater China, EMEA and the Asia Pacific, Latin America region.
Across Nike, gross profit rose 5% from $3.75 bn in the third quarter of 2017 to $3.93 bn in the third quarter.
Gross margin of 43.8% was 0.7% lower in Q3 2018 than in Q3 2017. Nike said, unfavourable changes in exchange rates were only partially offset by lower production costs.
In the 2018 quarter, selling and administration expenses rose by 11% to $2.8bn. This was partly as a result of $862 m being spent on ‘demand creation expenses’. These were up 15% ‘driven primarily by higher spend in sports marketing, brand moments and launches’.
The company faced an effective tax rate of 179%. This was due to the effects of the Tax Cuts and Jobs Act. This applies in the US and came into force in December 2017 in the US. This added $2bn tax costs, related to 'the transition tax on our accumulated foreign earnings and remeasuremet of deferred tax assets and liabilities.' This figure is a provisional estimate, said the company.
The tax increase led to a loss of $ 912 m in the quarter.
Mark Parker, Nike Chairman, said, ‘Consumer Direct Offense drove strong double-digit growth across our international geographies. This was led by Greater China,' said Mark Parker, Chairman, President and CEO, Nike.