Retail

Nike still 'bullish' on China despite uncertainty about US tariffs

Key Points
  • Nike executives remain bullish about the retailer's growth in China, saying that the company has not seen any impact on sales in China despite trade tensions. 
  • President Donald Trump and Chinese leader Xi Jinping have declared a temporary trade truce, but it remains uncertain if a long-term deal will result or if tariffs will be placed on footwear and apparel on China.
  • Nike sources more than 20 percent of its goods from China, according to Wedbush estimates.
Shoppers At Niketown Store In San Francisco.
David Paul Morris | Bloomberg | Getty Images

Nike has not yet seen any impact on its sales in China and does not expect to see any major fallout, despite continuing uncertainty about the trade relationship between the U.S. and China.

The Oregon-based company sources more than 20 percent of its goods from China, according to recent estimates from Wedbush analysts. As the trade war between the U.S. and China has escalated, President Donald Trump has threatened to impose tariffs on footwear and apparel imported from the country. Trump and Chinese leader Xi Jinping declared 90-day ceasefire on Dec. 1, but it remains uncertain if the two countries will be able to agree on a long-term solution.

"We are bullish about our potential to deliver strong, sustainable growth in this important geography," CFO Andy Campion said about China on a conference call with analysts Thursday. "For over three decades, Nike has been a brand of China, for China."

Campion also said that the retailer has not seen any impact of trade tensions on its Chinese sales during its second quarter. For the 18th consecutive quarter, Nike saw double-digit revenue growth. Singles' Day, China's biggest online shopping day, broke records for the company.

Bob Phibbs, CEO of New York-based consultancy the Retail Doctor, called the potential tariffs the most important consideration for the company going into 2019.

"Until we know whether the tariffs are being enacted, it's hard to predict where Nike is headed in the coming quarter," Phibbs said.

The company's stock was up 6 percent on Thursday in extended trading after Nike beat estimates on both its top and bottom lines and provided a optimistic outlook despite macroeconomic conditions. The retailer is anticipating currency-neutral revenue growth between the high-single digits and low-double digits for its current fiscal year.

During its fiscal second quarter, Nike's sales in China grew 26 percent to $1.54 billion. That was the fastest pace of any division.

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