Nike Earnings Top Estimates, Soothing Slowdown Concerns

  • Consumer demand and lower selling costs helped fuel results
  • Western Europe, China and emerging markets especially strong

Nike 2Q Earnings Surpass Analysts' Estimates

Nike Inc. posted second-quarter results that surpassed analysts’ estimates, easing concerns that the world’s largest sports brand is losing ground to competitors such as Adidas AG and Under Armour Inc. 

Profit was 50 cents a share in the period, which ended Nov. 30, Nike said in a statement after the market closed on Tuesday. That compared with the 43-cent average of analysts’ projections. Sales rose 6 percent to $8.2 billion, beating estimates for $8.09 billion.

The results helped rebuff critics who warned that Under Armour and a resurgent Adidas were stealing Nike’s market share, especially among U.S. shoppers. Consumer demand globally helped fuel sales last quarter, especially in Western Europe, China and emerging markets. Lower selling and administrative expenses also helped bolster profit.

“We are well-positioned to carry our momentum into the back half of the fiscal year and beyond,” said Chief Executive Officer Mark Parker, 61.

The stock, which has been on pace for its first annual decline in eight years, rose as much as 3 percent to $53.35 in New York on Wednesday. It had fallen 17 percent this year through Tuesday.

Futures Orders

Futures orders for the Nike brand, a key benchmark that investors have used to assess Nike’s growth, gained 2 percent, excluding currency. That missed the 5.3 percent increase analysts were projecting. Nike reports orders for six regions, and every area other than emerging markets trailed estimates. That included North America, its largest market, which posted a drop of 4 percent. Analysts predicted a gain of 1.5 percent.

Nike had tried to play down the significance of the futures data, saying the orders aren’t an adequate proxy for growth. The measure also doesn’t include its Converse, Hurley and Nike Golf divisions, as well as its outlet stores. Still, it’s been a focus of analysts and investors for years.

With this earnings report, Nike began delivering its global futures number in its earnings call rather than a press release. Regional numbers were then disclosed on its investor website after the call. All this information used to be in the earnings release and was often what drove movement in Nike’s shares.

Excluding currency changes, Nike’s revenue jumped 17 percent in the greater China region. It gained 13 percent in emerging markets and 12 percent in Western Europe. North America, the Beaverton, Oregon-based company’s biggest market, rose 3 percent.

Nike also repurchased 17 million shares in the second quarter, part of a $12 billion buyback program approved by the board last year. A total of 56 million shares have been repurchased as of the end of the last quarter.

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