(Reuters) -Nike reported a smaller-than-expected decline in quarterly results on Thursday, showing the first signs of recovery as its new Pegasus Premium and Vomero 18 sneaker lines drive an uptick in demand.
Shares of the Air Jordan maker rose 4% in extended trading.
Newly launched sneakers, fast-tracked by new CEO Elliott Hill, have performed well enough to give the sportswear maker some breathing room after several quarters of weak demand.
Hill took the helm in October to lead a turnaround at a company that has lately struggled to design new, innovative shoes.
With rivals On and Hoka retaining their freshness in the eyes of consumers, analysts and investors heading into the quarter had struck a cautious tone, anticipating that Nike’s turnaround could take a few more quarters.
In the five months since he took charge, Hill has stressed the need to turn Nike’s focus back to its core business of sport and to repair its relationships with retailers, which suffered when ex-CEO John Donahoe shifted the company’s focus to direct-to-consumer sales.
Nike also discounted key lifestyle franchises Air Jordan 1, AirForce 1 and Dunk during the quarter, as it looks to clear out old inventory and focus on innovation. That sweetened the pot for buyers, who had waited all year to splurge in the holiday season.
The company’s third-quarter revenue fell 9% to $11.27 billion, compared with analysts’ expectation of an 11.5% drop to $11.01 billion, according to data compiled by LSEG.
Nike’s $2 billion savings plan including job cuts, tightening the supply of some products and reducing management layers helped it report a quarterly profit per share of 54 cents, about a 30% fall compared to a year ago.
Analysts on average were expecting a 62.2% decline to 29 cents per share.
However, gross margin fell 330 basis points to 41.5%, with Nike primarily attributing it to higher discounts, an excess of outdated inventory and increased product costs.
(Reporting by Ananya Mariam Rajesh in Bengaluru and Nicholas P. Brown in New York; Editing by Pooja Desai)
