Nike exceeded Wall Street’s expectations, selling more sports gear and sneakers in the fiscal fourth quarter and helping boost its revenues as much as 4% or more than $10 billion.
Its earnings went out last Thursday. Although, it missed what analysts expected by some pennies each share. The stock at the outset dropped over 4% during the after-hours trading before getting its momentum back. Shares started to trade relatively brighter at 6 p.m. ET.
In an adjusted basis, Nike notched 62 cents per share during the first quarter ended May 31, below what Wall Street has forecasted at 66 cents per share, based on the median estimates derived by Refinitiv.
Nike brand’s revenues, excluding its Converse merchandise, soared 10% in the same quarter the previous year at $9.7 billion. The sales of Converse were flat at around $491 million.
North America’s total sales, not taking into account the currency rates’ fluctuations, increased 8% or $4.17 billion. China region’s sales up 22% or $1.70 billion.
The company has experienced troubles growing its sales in its home ground as its competitors in the US like Lululemon and Adidas – and other smaller rivals like Rhone and Outdoor Voices – are slated to get market share with their athletic clothes and footwear products.
Total sales of footwear in North America, without movements on currency rates, increased by 9% in the previous quarter. Meanwhile, Nike’s clothing business up.6% while equipment sales soared 7%.
Nike said the margins of profits were affected this quarter slightly due to investments aiming to cater more direct consumers and less via wholesalers. Nike was forced to offer more of its merchandise straight to customers since retailers such as the Sports Authority had to file for bankruptcy while department stores have difficult times generating sales.
The company is also spending resources on its supply chain to produce new products, such as the running shoes Vapormax, and stocks stores quickly for consumers. This is what giving Nike advantage over rivals Under Armour and Adidas.
Mark Parker, Nike’s CEO, stated in a note declaring results that the company has made “deeper relationships” with consumers across the globe in the first quarter. For instance, it just launched a functionality in its application dubbed as “Nike Fit” that let shoppers scan their feet and then displays their exact shoe sizes.
Nike told that their revenues coming from their direct-to-consumer totaled to $11.8 billion in 2019 fiscal year, boosted by a 35% jump with its sales online plus same-stores sales advancement at 6%. The company said wholesale customer sales increased by 10% for the year.
Meanwhile, Nike also said that its women’s business increased double-digits in the current year and gained more as the fiscal year passed. In the fourth quarter, it launched more sports bras in various sizes and improved Jordan for women, in an attempt to up sales to female consumers. Historically, Nike sold much more products to men.
Parker told analysts on a conference call that the significant advantage they see in the few coming years is the opportunity that digital may lead to. The CEO also stressed that one of the hardest barriers they’ve faced is distribution, and they will continue to encounter that every time they present their merchandise in a much-advanced manner, though the company was able to bring female customers in a new realm which they’ve been receptive.
Parker noted that the company’s women part of their direct-to-consumer business continues to topple the wholesale channel.
The CEO also stressed that despite the current trade conflict between China and the U.S., Nike is a brand, remains a brand and will be a brand for China.
Nike hasn’t felt much impact until today from the continuous trade war overseas. It was said that the customer sentiment with Nike throughout China has been relatively stable.
Nike finished the market last Thursday with a little than 1% increase.