Nike (NKE - Free Report) posted better-than-expected Q3 fiscal 2019 earnings and revenue after the closing bell Thursday. Shares of NKE had surged 15% this year heading into the release and popped 1.6% during regular trading hours, before dipping after-hours. So, let’s break down the sportswear giant’s footwear sales, as well as North American and Chinese revenue.
Quick Overview
Nike posted adjusted quarterly earnings of $0.68 a share, which topped our $0.63 per share Zacks Consensus Estimate by 8%. Investors should note that Nike’s management team is excellent and the firm almost always tops quarterly earnings projections. Last quarter, Nike beat our earnings estimate by over 15%.
Along with its solid earnings beat, Nike’s gross margin popped by 1.3% to reach 45.1%. The company attributed its margin expansion to higher average selling prices, favorable changes in foreign currency exchange rates, along with growth in its digital-focused Nike Direct business. Meanwhile, Nike’s selling and administrative expenses jumped 12% to $3.1 billion, driven in part by a 17% increase in overhead.
On the other end of the income statement, Nike’s quarterly revenue climbed roughly 7% to hit $9.611 billion and surpass our Zacks Consensus Estimate that called for $9.54 billion. This, however, marked a bit of a slowdown from Q2’s 10% revenue growth.
Details
Nike stock was able to regain momentum over the last year on the back of a return to growth in its key North American market, which represents around 40% of total company sales, after a stretch of declines. With that said, NKE’s sales in its home market popped 7% to $3.810 billion. This fell short of our $3.87 billion NFM estimate and marked a slowdown from Q2’s 9% North American sales growth.
Despite the small miss, Nike proved its strength in the vital region as it fights off rival Adidas (ADDYY - Free Report) and blows away Under Armour (UAA - Free Report) . Meanwhile, Wall Street also likely paid close attention to the sportswear firm’s sales in Greater China.
Sales in China surged 19% to hit $1.588 billion, which came in well above our $1.54 billion estimate and represented the 19th consecutive quarter of double-digit revenue growth in the world’s second-largest economy. We should point out that Nike’s performance fell short of Q2’s 26% Chinese expansion. Still, Nike was able to post solid growth, while the country’s broader economic downturn really hurt the likes of Apple (AAPL - Free Report) , Alibaba (BABA - Free Report) , and many others.
On top of continued North American and Chinese growth, the company’s footwear business jumped. The company’s Nike brand footwear sales popped 9% from $5.605 billion in the year-ago period to reach $6.122 billion. More specifically, Footwear sales, which account for roughly 60% of total Nike sales, jumped 9% in North America—to outpace the region’s 7% total growth—and 19% in China.
Bottom Line
In the end, Nike’s direct-to-consumer push is likely to remain a key catalyst for the stock going forward. Meanwhile, the company remains focused on strategic wholesale partnerships with the likes of Foot Locker (FL - Free Report) , Nordstrom (JWN - Free Report) , and Dick’s Sporting Goods (DKS - Free Report) . Nike stock rested down nearly 4% in after-hours trading Thursday.
Make sure to head back to Zacks for a full breakdown of Nike’s conference call, in order to evaluate the sportswear powerhouse’s digital performance in the Amazon (AMZN - Free Report) age and check out any athleisure updates as NKE fights off competition from Lululemon (LULU - Free Report) and others.
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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Nike (NKE - Free Report) posted better-than-expected Q3 fiscal 2019 earnings and revenue after the closing bell Thursday. Shares of NKE had surged 15% this year heading into the release and popped 1.6% during regular trading hours, before dipping after-hours. So, let’s break down the sportswear giant’s footwear sales, as well as North American and Chinese revenue.
Quick Overview
Nike posted adjusted quarterly earnings of $0.68 a share, which topped our $0.63 per share Zacks Consensus Estimate by 8%. Investors should note that Nike’s management team is excellent and the firm almost always tops quarterly earnings projections. Last quarter, Nike beat our earnings estimate by over 15%.
Along with its solid earnings beat, Nike’s gross margin popped by 1.3% to reach 45.1%. The company attributed its margin expansion to higher average selling prices, favorable changes in foreign currency exchange rates, along with growth in its digital-focused Nike Direct business. Meanwhile, Nike’s selling and administrative expenses jumped 12% to $3.1 billion, driven in part by a 17% increase in overhead.
On the other end of the income statement, Nike’s quarterly revenue climbed roughly 7% to hit $9.611 billion and surpass our Zacks Consensus Estimate that called for $9.54 billion. This, however, marked a bit of a slowdown from Q2’s 10% revenue growth.
Details
Nike stock was able to regain momentum over the last year on the back of a return to growth in its key North American market, which represents around 40% of total company sales, after a stretch of declines. With that said, NKE’s sales in its home market popped 7% to $3.810 billion. This fell short of our $3.87 billion NFM estimate and marked a slowdown from Q2’s 9% North American sales growth.
Despite the small miss, Nike proved its strength in the vital region as it fights off rival Adidas (ADDYY - Free Report) and blows away Under Armour (UAA - Free Report) . Meanwhile, Wall Street also likely paid close attention to the sportswear firm’s sales in Greater China.
Sales in China surged 19% to hit $1.588 billion, which came in well above our $1.54 billion estimate and represented the 19th consecutive quarter of double-digit revenue growth in the world’s second-largest economy. We should point out that Nike’s performance fell short of Q2’s 26% Chinese expansion. Still, Nike was able to post solid growth, while the country’s broader economic downturn really hurt the likes of Apple (AAPL - Free Report) , Alibaba (BABA - Free Report) , and many others.
On top of continued North American and Chinese growth, the company’s footwear business jumped. The company’s Nike brand footwear sales popped 9% from $5.605 billion in the year-ago period to reach $6.122 billion. More specifically, Footwear sales, which account for roughly 60% of total Nike sales, jumped 9% in North America—to outpace the region’s 7% total growth—and 19% in China.
Bottom Line
In the end, Nike’s direct-to-consumer push is likely to remain a key catalyst for the stock going forward. Meanwhile, the company remains focused on strategic wholesale partnerships with the likes of Foot Locker (FL - Free Report) , Nordstrom (JWN - Free Report) , and Dick’s Sporting Goods (DKS - Free Report) . Nike stock rested down nearly 4% in after-hours trading Thursday.
Make sure to head back to Zacks for a full breakdown of Nike’s conference call, in order to evaluate the sportswear powerhouse’s digital performance in the Amazon (AMZN - Free Report) age and check out any athleisure updates as NKE fights off competition from Lululemon (LULU - Free Report) and others.
Zacks' Top 10 Stocks for 2019In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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