Shares of Nike Inc. surged in after-hours trading Thursday when the company reported third-quarter earnings and futures orders well ahead of Wall Street’s expectations.
Virtually the only decreases in Nike’s report for the three months ended Feb. 28 came from declines in both its sales and operating income in Greater China, which pulled back 8.5 percent and 20.1 percent, respectively, under pressure from what Mark Parker, president and chief executive officer, termed Nike’s “strategy to reset the marketplace. But we still have more to do before it can capture its long-term growth potential.”
After hitting a new 52-week high of $54.72 in midday trading, shares closed at $53.60, down $1.23 or 2.2 percent, in Thursday’s regular trading session. Upon the release of results after the market, they began an upward trajectory that would see them pick up 8.4 percent to $58.10.
For the quarter, net income rose 54.6 percent to $866 million, or 95 cents a diluted share, from $560 million, or 60 cents. Excluding discontinued operations, such as the Cole Haan and Umbro brands sold since the close of the first quarter, earnings per share were 73 cents, 6 cents above the 67-cent result expected, on average, by analysts.
Revenues from continuing operations in the quarter rose 9.4 percent to $6.19 billion, below the $6.23 billion Wall Street expected, from $5.66 billion a year ago. Although down for the year to date, quarterly gross margin picked up 30 basis points to 44.2 percent of sales from 43.9 percent in last year’s period.
Nike apparel revenues grew 7.5 percent to $1.57 billion while footwear grew more briskly, up 9.3 percent to $3.66 billion. In North America, apparel sales were up 21.6 percent to $697 million while in Western Europe and China, Nike’s second and third largest regions for clothing, they dropped 2.3 percent and 11.3 percent, respectively, to $298 million and $196 million.
The closely watched futures orders metric, which measures Nike brand footwear and apparel scheduled for delivery through July, rose 6 percent and was up 7 percent on a currency neutral basis, well ahead of the 4.7 percent bump expected.
Operating income was up in all geographic markets except China. The largest gain, and the largest contribution to profitability, came from North America, where earnings before interest and taxes rose 24.3 percent to $625 million.
Parker pointed out that Nike’s e-commerce business grew 33 percent in the third quarter, outpacing the growth in direct-to-consumer sales overall.
During the company’s late-afternoon conference call, Charles Denson, president of Nike brand, said of China, “Near term, we are continuing to focus on aggressively clearing inventory from the marketplace....While we continue to see progress, we still have work to do to clean up the market.” Don Blair, chief financial officer, noted that futures orders in Greater China were up 3 percent at constant currency but flat in Mainland China.
For the first nine months, net income rose 8.5 percent to $1.82 billion on an 8.9 percent increase in revenues from continuing operations to $18.62 billion.
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)
@badgalriri’s @fentybeauty launch in September was a massive success on social media, powering $72.9 million of earned media value, according to Tribe Dynamics. The brand’s foundation offering sparked conversations about diversity in beauty, launching the growth of emerging influencers and propelling the brand’s support on social media. Today, #fentybeauty won Launch of the Year at the WWD #BeautyIncAwards. (📷: Chema Moya/EPE-EFE)
@marianna_hewitt has become one of the most influential content creators in the beauty space, with almost 800,000 Instagram followers and a newly launched skin care line called @SummerFridays. Today, she was awarded Influencer of the Year at the WWD #BeautyIncAwards. (📸: @sophiachabbott )
As shopping behaviors evolve, the retail experience must follow. Head over to retail experts @colliersinternational’s Knowledge Leader series to read more about the shift in our shopping era. #colliersretail #lovecolliers
@prada opened a pop-up club, called Prada Double Club, in collaboration with German artist Cartsen Höller at @artbasel Miami. Last night, guests – including @youngparis, @ritaora and even Miuccia Prada herself – gathered in a former ice factory where the pop-up is housed for a performance from @wyclefjean. Go to WWD.com for full coverage on all the exhibits, parties and more at #ArtBaselMiami. #wwdeye (📷: @lexieblacklock)
@louboutinworld and @disney are making magic once again, creating a set of shoe designs for the release of “Star Wars: The Last Jedi.” Louboutin designed a pair of shoes for each of the film’s four female leads: Rey (@daisyridrey), Vice Admiral Amilyn Holdo (@lauradern), Captain Phasma (Gwendoline Christie) and Rose Tico (@kellymarietran). The shoes will debut on Saturday at the L.A. premiere of the latest episode. #wwdfashion
Today at the #BeautyIncAwards 2017, WWD will be joined by beauty leaders from around the world as we honor this year's most innovative people, products, brands and places. Follow along here and on Twitter for live coverage from the exclusive event. #wwdsummits (📷: @elizaflorendo)
Exclusive: Beauty superinfluencer @marianna_hewitt is launching her first-ever skin care brand with her business partner @laurengores. Their new line Summer Fridays, which will be sold exclusively at summerfridays.com starting in January, is launching with just one product – a hydrating cream Jet Lag Mask. “We wanted to focus on one product that was amazing,” said Hewitt. Read the full interview on WWD.com. Link in bio. #wwdbeauty #wwdnews
Michelin star-rated chef PJ Calapa marks his first solo endeavor with today’s opening of @scampinyc –– the new Southern Italian restaurant located in Manhattans’ Flatiron District. The upscale yet welcoming environment matches the menu, which includes two types of scampi: traditional Italian langoustines in butter and the Americanized version with shrimp over pasta 🍤 - pictured here. #wwdeye (📷: George Chinsee)