Nike posts higher-than-expected 4Q revenue and finishes 2017 strong
Somewhat eclipsed by its German competitors lately, at least in millennial marketing coups, the U.S. sports giant Nike Inc. proved in its 4th-quarter and 2017 financial results on Thursday that business is indeed brisk.
The world's largest footwear maker reported quarterly revenue and profit that topped Street estimates as the company kept a lid on costs and saw greater demand in Western Europe, China and emerging markets. Revenue rose 5.3 percent to $8.68 billion for the fourth quarter Analysts on average had expected revenue of $8.63 billion, according to Thomson Reuters I/B/E/S. “NIKE continues to create both near-term wins in today’s dynamic environment and a lasting foundation for future growth,” said CEO Mark Parker, Chairman, in a statement . “Through our Consumer Direct Offense, we’re putting even more firepower behind our greatest opportunities in Fiscal 2018. It will be a big year for NIKE innovation and we’ll bring those stories to life through deeper consumer connections in our key cities around the world.” By brand segments, Nike's namesake brand was up 7 percent for the fourth quarter, totaling $8.1 billion, powered by growth in markets outside the U.S. as well as in its sportswear and running categories. Converse revenues increased 10 percent to $554 million. Net income for the quarter increased 19 percent to $1.0 billion, which the company attributed to global revenue growth, lower selling and administrative expense and a lower tax rate, all slightly offset by a gross margin decline. Nike's sales in Greater China jumped 11 percent for the reporting quarter. In China, the company has revamped stores and increased online efforts in a bid to reinvigorate demand in the world's No. 2 economy. The company's selling, general and administrative expenses fell 4 percent to $2.7 billion.
Sales in Western Europe, Nike's second-largest market, were up 4 percent in the fourth quarter ended May 31. For Fiscal Year 2017, the sports giant reported revenues up 6 percent to $34.4 billion for the year. The year was buoyed by growth in all regions as well as the Jordan Brand, sportswear and running. Wholesale revenues of the Nike brand increased 5 percent while direct-to-consumer sales spiked a whole 18 percent, thanks in part to a 30 percent increase in e-commerce sales. Nike could also boast of an expansion to its store network, now totaling 985 retail stores compared to 919 at the end of fiscal 2016. Shares of the Dow component were up nearly 3 percent at $54.67 in after-market trading on Thursday. In the face of intense competition in North America and to promote its core brands such as ZoomX, Air VaporMax and Nike React, the company earlier in June said it would cut 2 percent of its global workforce and trim a quarter of its shoe styles as it looks to become nimbler. Excluding certain items Nike earned 60 cents per share, well ahead of analysts' average estimate of 50 cents.