Nike Q3 Profit Beats, But Revenue Falls Just Short As Inventories Rise

Nike Inc. (NYSE:NKE) late Tuesday [Mar 21, 2017 | 4:15pm ] posted mixed fiscal third quarter earnings results, with profits easily topping estimates but revenue coming in a bit lighter than expected.

Written by StockNews.com

The Beaverton, OR-based athletic footwear and apparel giant reported Q3 EPS of $0.68, which was $0.15 better than the Wall Street consensus estimate of $0.53.

Revenues rose 5% from last year to $8.43 billion, narrowly missing analysts’ $8.47 billion view.

NKE noted that revenues for the Nike brand were $7.9 billion, up 7% when disregarding currency effects. That growth was driven by strong performance in Western Europe, Greater China and the Emerging Markets. Its Sportswear and Jordan Brand categories stood out as top sellers in the latest quarter.

On a sour note, gross margin fell 140 basis points to 44.5%. Margins were hurt by higher input costs, foreign currency effects, and a greater amount of discounted sales of its produces. Inventories also rose 7% to $4.9 billion, in a sign that sales may not be progressing as well as hoped.

The company commented on its latest quarter via press release:

“The power of NIKE’s diverse, global portfolio delivered another solid quarter of growth and profitability,” said Mark Parker, Chairman, President and CEO, NIKE, Inc. “To expand our leadership and ignite NIKE’s next phase of growth, we’re delivering a relentless flow of innovation through performance and style, increasing speed throughout the business and creating more direct connections with consumers leveraging digital and membership.”

Investors had a tepid response to Nike’s latest results, with shares falling $0.71 (-1.22%) to $57.30 in after-hours trading. Year-to-date, NKE had gained 14.48% prior to today’s report, versus a 4.56% rise in the benchmark S&P 500 index during the same period.

NKE currently has a StockNews.com POWR Rating of B (Buy), and is ranked #7 of 33 stocks in the Athletics & Recreation category.