Nike’s profit and sales beat forecasts, stock rises 11%

(Reuters) – Nike beat expectations for quarterly profit and posted a smaller-than-expected drop in revenue on Thursday as customers flocked to the embattled sportswear brand’s stores and website to buy newly released versions of performance and running shoes.

Shares of Nike rose 11% in extended trading, adding $12 billion to the company’s stock market value.

With rivals launching more comfortable, better-cushioned shoes, Nike has struggled to regain dominance in the market, where it has shelled out money to introduce new products like the Air Max 95 and to promote staple franchises like Jordans and Pegasus.

Investors on Thursday’s earnings call will be eager to hear more about new CEO Elliott Hill’s vision for how to rebuild Nike’s retail partnerships, increase innovation and sharpen its focus on its core running business.

“After 60 energizing days of being back with my Nike teammates, our clear priority is to return to the sport at the center of everything we do,” said Hill.

“We are taking immediate action to reposition our business so we can get back to driving long-term shareholder value,” he added.

Last month, the company under Hill announced it would double down on three running franchises — Pegasus, Structure and Vomero — by launching different iterations of each shoe next year at different price points. The company’s second-quarter net revenue fell 7.7% to $12.35 billion. Analysts had expected a drop of 9.41% to $12.13 billion, according to estimates compiled by LSEG.

Nike reported earnings per share of 78 cents, compared with estimates of 63 cents per share, according to analyst estimates compiled by LSEG.

(Reporting by Ananya Mariam Rajesh in Bengaluru and Nicholas P. Brown in New York; Editing by David Gregorio and Pooja Desai)