Nike Inc.’s revenues came in just shy of expectations in the third quarter, spooking investors even though profits exceeded estimates.
The athletic giant’s third-quarter earnings increased 20 percent to $950 million, or 55 cents a diluted share, from $791 million, or 45 cents, a year earlier. Revenues for the three months ended Feb. 29 gained 8 percent to $8.03 billion from $7.46 billion.
Earnings per share came in 6 cents ahead of the 49 cents analysts expected, but sales were $168 million shy of external projections. That seemed to worry investors, who pushed the stock down 6 percent to $60.98 in after-hours trading.
Mark Parker, president and chief executive officer, nonetheless delivered pep rally-ready remarks to analysts on a conference call covering the results.
“The foundation for Nike’s success and one of our greatest competitive advantages is our complete offense,” Parker said. “It’s what gives us the power to use our size and scale to accelerate growth and the flexibility to stay nimble and fast….The complete offense also allows us to manage through volatility and take important actions to sustainable momentum in our business. It’s how we ensure a healthy marketplace so we can continue to deliver all of the amazing products we have on the horizon to our consumers.”
The ceo said Nike’s never been in a better position.
“I’m inspired by the work that we’re doing. The management team and the people they lead are the best in industry,” Parker said. “That’s critical because the changes we’re seeing in the world are fast and massive. And so are the opportunities.”
Nike id working hard to bring newness to the market, introducing a slew of fresh products and collaborations last week. And it’s thinking about the future. The firm recently poached Under Armour’s senior vice president of design, Dave Dombrow, and is willing to wait out his non-compete, which lasts until 2017.
But the firm’s third-quarter gross margins, at 45.9 percent, were flat compared with a year earlier as higher average selling prices and growth in the better-margin direct to consumer business were offset by currency exchange rates, higher warehousing costs and the impact of efforts to clear excess inventory in North America.
The company said its global future orders for Nike branded footwear and apparel, scheduled for delivery between this month and July, were 12 percent higher than a year ago, or 17 percent higher excluding currency fluctuations.
The future orders indicate that Nike remains a powerhouse. Even with Tuesday’s stock decline, it has an eye-popping market capitalization of nearly $103.9 billion.