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Nike Beats Q1 Estimates, Stock Sells Off 3%

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After today's closing bell, the world's largest publicly traded apparel retailer, Nike (NKE - Free Report) , reported fiscal Q1 2019 earnings results. The company beat on top and bottom lines: 67 cents per share as opposed to 62 cents expected and up 18% year over year, on sales of $9.9 billion which took out the consensus estimate of $9.88 billion, up 9% (currency neutral) from Q1 2018.

Nike has not missed earnings estimates in practically forever. At least 20 quarters, going back to the end of fiscal year 2014: check the chart here.

In the quarter, the signature Nike brand grew 10% year over year, while Converse (which Nike also owns) was up 7% from the year-ago quarter, helped in large part by sales gains in Europe and Asia. Yet gross margins came in at 44.2%, 50 basis points lower than Q4 2018, which is helping lead late-market trading of the shares down roughly 3%. Nike had been trading up around 35% year-to-date prior to the earnings release.

In the breakdown by region, North America grew 6%; Europe, Middle East & Africa (EMEA) +9%; Asia-Pacific/Latin America +7% and China up a nice 24%. The company also continued its share buyback program begun in June with an additional 178 million shares purchased for a total amount of $1.4 billion. This is part of a 4-year, $12 billion program.

Nike took a gamble in the quarter ahead of the start of the the NFL football season this year by featuring estranged quarterback Colin Kaepernick in its print ads; many football fans took exception and staged protests, destroyed Nike merchandise, etc. upon the unveiling. Clearly, however, the company made out OK in spite of the actions taken against the company.

Ahead of its earnings announcement, Nike carried a Zacks Rank #3 (Hold) rating and a Style Score (Value - Growth - Momentum) of B. For more on NKE's earnings, click here.

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