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.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)