Nike posted a loss for the quarter for the first time in 20 years thanks to a tax expense of $2 billion related to the recent tax law changes in the U.S. However, the sneaker maker’s results for its third quarter easily outdistanced Wall Street expectations and shares jumped in reaction during trading after the bell.
Nike also addressed the recent departures by high profile executives. Company CEO Mark Parker admitted there had been problems with company culture, but did not provide details.
Parker said that Nike has become aware of behavioral issues inconsistent with the values of respect, empowerment and inclusivity that Nike has. He added that he was committed to ensuring that Nike has an environment where all Nike employees have a positive experience.
Last week Nike announced that brand president Trevor Edwards, who was seen as possibly taking over one day as CEO, was leaving in August.
The company, based in Beaverton, Oregon did not say why Edwards was leaving, but a report in the Wall Street Journal said that Edwards’ resignation had been announced through an internal memo to Nike employees that said the company received complaints of inappropriate behavior at the workplace. One day later Nike announced that a vice president left the company, but gave no reason.
The shakeup in leadership comes during a period where Nike is attempting to increase its sales across North America, its largest market. Nike has faced increased competition within the region, especially from Adidas the German sneaker maker, whose sales have been rising on the continent.
In an attempt to increase sales, Nike signed a new deal with Amazon in 2017, sold footwear through Snapchat the social media app, and launched new apps in an attempt to sell additional shoes. Nonetheless, sales in North America were down 6% during the quarter, said the company on Thursday.
It experienced more demand for its goods outside the United States, especially across China, where its sales were up an amazing 24%. Overall, Nike’s revenue was higher by over 7% to end the quarter at $8.98 billion which easily topped expectations on Wall Street.
It posted a $921 million loss equal to 57 cents a share, for its three months ended February 28, which Nike said was due to a tax charge of one-off for $2 billion
The last time Nike posted a loss for the quarter was in 1998.