Nike Inc. (NKE, Financial), a major sports apparel manufacturer, said fiscal third-quarter revenues increased 7% year over year, led by strong double-digit growth across international markets.
Even though the company recorded a $1.25 per share tax expense, Nike reported $9 billion in revenue and 68 cents in adjusted earnings per share, both outperforming analyst expectations for the quarter.
Company accelerates earnings momentum in key global markets
CEO Mark Parker mentioned the company's “consumer direct offense” led to strong and sustainable growth in international markets, especially in China.
Chief Financial Officer Andy Campion mentioned several key sales drivers, including the partnership with Alibaba Group Holding Co.’s (BABA, Financial) Tmall and the launch of the new Sneaker App. Parker mentioned in the earnings call that the Sneaker App saw 2 million downloads, contributing to an 18% year-over-year increase on a currency-neutral basis.
Company offers strong performance guidance for fiscal 2018 and 2019
Parker also said the strong momentum in Nike’s digital ecosystem will result in a “significant reversal of trend in North America.” The CEO mentioned two key momentum drivers, including the narrow gap between the company and the consumer and key partnerships with companies like Finish Line Inc. (FINL, Financial).
For the upcoming quarter, management expects slightly higher gross margins.Ă‚ While foreign exchange headwinds still offset strong currency-neutral gross margin expansion, the headwinds are expected to mitigate in the upcoming quarter.
Campion also mentioned strong preliminary revenue guidance for fiscal 2019, including revenue growth in the mid- to high single digits due to the continued momentum in international markets and the reversal to positve growth in the U.S.
GuruFocus ranks Nike’s profitability 8 out of 10 primarily due to expanding operating margins and strong returns: not only is Nike’s return on equity near a 10-year high of 34.38%, but it also outperforms over 91% of global footwear companies.
Nike’s business predictability rank remains 4.5 stars, suggesting strong and sustainable revenue and earnings growth. The company’s share price increased approximately 5.84% after the market closed due to the earnings beat and strong outlook.
Disclosure: No positions.
