Nike fourth-quarter earnings take a hit, despite better-than-expected sales

By

Benjamin Fitzgerald

Published
Jun 28, 2019

Nike Inc. reported on Thursday fourth-quarter revenues that surpassed analysts' expectations. However, the U.S. sportswear company failed to dodge an earnings miss for the three months, on increased expenses and investment.

The Beaverton, Oregon-based Nike said fourth-quarter revenues increased to $10.2 billion, up 4 percent on a reported basis. The results surpassed analysts' expectations of $10.16 billion, according to IBES data from Refinitiv.

However, net income for the quarter fell by 13 percent to $989 million, with diluted earnings per share of $0.62. Profits were hit by higher selling and administrative expenses, which were up 9 percent to $3.4 billion, said the U.S. sportswear giant.

In a further earnings blow, analysts on average had expected earnings of $0.66 per share.

In a statement released on Thursday, Nike chief executive officer, Mark Parker, remained upbeat, highlighting the company's improved fiscal 2019, which saw strong revenue and earnings gains for the twelve months.

“FY19 was a pivotal year for Nike as we continue to bring our consumer direct offense to life throughout the marketplace,” said Parker.

“Our distinctive innovation and digital advantage led to accelerated growth across our complete portfolio, while our brand fueled deeper relationships with consumers around the globe."

For the full-year ended May 31, Nike reported revenue growth of 7 percent to $39.1 billion, up 11 percent on a currency-neutral basis.

Its namesake Nike brand soared 11 percent to $37.2 billion, driven by growth across Nike 'direct' -- which grew 16 percent; as did wholesale, with key categories including sportswear, Jordan and running. Comparable sales were up 6 percent, with digital up 35 percent.

Nike also witnessed double-digit growth across footwear and apparel.

Revenues for Converse were $1.9 billion, up 3 percent on a currency-neutral basis, mainly driven by double-digit growth in Asia, it said.

Net income was up 108 percent to $4 billion with diluted earnings per share of $2.49 for the twelve months. Mimicking the fourth quarter, yearly profit was slowed by an increase in selling and administration expenses, up 10 percent to $12.7 billion.

Nike CFO Andy Campion emphasised the importance of growth at Nike, reaffirming the amount of investment  -- as "strategic transformation" -- made by Nike in the twelve months under Parker's leadership.

“Reflecting on our FY19 performance, it is clear that growth is paramount at Nike, and that our strong growth is being driven by strategic transformation,” said Campion.