Nike beat on earnings, but an important measure of future sales whiffed
Nike on Tuesday reported fiscal-first-quarter earnings that beat expectations for profits and revenues amid investor concern about how it's faring in a weak US market for athletic apparel.
The company posted adjusted earnings per share of $0.73 on revenues of $9.1 billion.
Analysts had estimated that the company reported $0.56 in adjusted EPS on revenues of $8.87 billion, according to Bloomberg. Nike said its EPS was supported by a lower effective tax rate and share buybacks.
Worldwide futures orders, a measure of demand from retail stores and a forward-looking gauge of sales, rose 7% (8% expected). That's excluding the impact of currency fluctuations.
Futures orders in North America were also weaker than expected. They rose 1%, but analysts had estimated a gain of 5%.
The company has lost market share in clothing and footwear to rivals like Adidas that are ramping up investments to respond to consumers' changing tastes. As Under Armour took market share in the basketball category from Nike after a deal with Stephen Curry, Nike launched cheaper models of its KD and LeBron shoes.
Tuesday's earnings results showed that Nike's inventories continued to pile up, rising by 11% from the same quarter a year ago. They also reflected the partial cost of Nike's involvement in the Olympics; "demand creation expense" rose 25% to $1 billion, "reflecting investments in key sports events."
Nike shares fell by as much as 4% in after-hours trading. They had dropped 11% this year ahead of the market close on Tuesday, and were on pace for their first annual decline since 2009 according to Bloomberg.