Post Earnings Coverage as NIKE Quarterly Revenue Increased 7%; EPS Jumped 24%

Upcoming AWS Coverage on Iconix Brand Group Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 30, 2017 / Active Wall St. announces its post-earnings coverage on NIKE, Inc. (NYSE: NKE). The Company released its third quarter fiscal 2017 financial results on March 21, 2017. The athletic footwear and apparel juggernaut topped earnings estimates, but missed sales expectations. Register with us now for your free membership at:

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One of NIKE’s competitors within the Textile – Apparel Footwear & Accessories space, Iconix Brand Group, Inc. (NASDAQ: ICON), reported on February 22, 2017, its financial results for the fourth quarter and full year ended December 31, 2016. AWS will be initiating a research report on Iconix Brand in the coming days.

Today, AWS is promoting its earnings coverage on NKE; touching on ICON. Get our free coverage by signing up to:

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Earnings Reviewed

For its fiscal 2017 third quarter ended February 28, 2017, revenues for NIKE increased 5%, or up 7% on a currency-neutral basis, to $8.43 billion led by continued double-digit growth in Greater China, Western Europe, and the emerging markets, compared to revenue of $8.03 billion in Q3 FY16. Sales numbers missed analysts’ consensus of $8.47 billion.

During Q3 FY17, Nike’s gross margin contracted 140 basis points to 44.5% compared to 45.9% in Q3 FY16 as higher average selling prices were more than offset by higher product costs, unfavorable changes in foreign exchange rates and the impact of higher off-price sales. The Company’s selling and administrative expense decreased 3% to $2.5 billion. During the reported quarter, Nike’s Demand creation expense was $749 million, down 7%, as fiscal 2017 spending was frontloaded towards the first six months due to significant investments around the Olympics and the European Championships.

During Q3 FY17, Nike’s net income increased 20% to $1.1 billion compared to net income of $950 million and diluted earnings per share increased 24% to $0.68 versus $0.55 per diluted share in the previous year as revenue growth, selling and administrative expense leverage, higher other income (net), a lower tax rate, and a 3% decline in the weighted average diluted common shares outstanding more than offset lower gross margin. The Company’s earnings numbers surpassed market estimates of $0.53 per share.

Segment Results

During Q3 FY17, revenues for the Company’s NIKE Brand were $7.9 billion, increasing 7% on a currency-neutral basis, driven by double-digit growth in Western Europe, Greater China and the emerging markets as well as the Sportswear and Jordan Brand categories. Nike’s revenues for Converse were $498 million, up 3% on a currency-neutral basis, driven by growth in North America. Consumer demand in all geographies drove revenue growth across the NIKE Brand portfolio.

During Q3 FY17, Nike’s North America revenue grew 3% on both a reported and constant currency basis as the Company continues to see balanced growth across both footwear and apparel, highlighted by another quarter of strong growth in NIKE Sportswear and the Jordan Brand. EBIT growth of 9% outpaced revenue growth as gross margin expansion and SG&A leverage delivered increased profitability.

For the international markets, in Western Europe, revenue increased 10% on a currency-neutral basis as the Company delivered another quarter of strong multidimensional growth, led by its Sportswear, Running and Global Football categories. On a reported basis, revenue increased 4% while EBIT declined 13%, reflecting the impact of transactional FX headwinds and higher product costs on gross margin, partially offset by SG&A leverage.

For Nike’s emerging markets, revenue grew 13% on a currency-neutral basis, led by its Sportswear and Running categories. On a reported basis, revenue increased 8% while EBIT decreased 4% as results continue to be heavily impacted by FX.

Nike’s Greater China delivered another quarter of extraordinary results, with currency neutral revenue growing 15%. The Company continues to see strong momentum across the business with double-digit growth in wholesale and DTC, footwear and apparel, and nearly all categories.

Balance Sheet Review

During Q3 FY17, inventories for NIKE, Inc. were $4.9 billion, up 7% compared to the prior year as a 3% decrease in NIKE Brand wholesale unit inventories was offset by increases in average product costs per unit and higher inventories associated with growth in DTC. The Company’s cash and short-term investments were $6.2 billion, $1.1 billion higher than the prior year as growth in net income and proceeds from the issuance of debt in Q2 FY17 as well as proceeds from employee exercises of stock options more than offset share repurchases, higher dividends, and investments in infrastructure.

Share Repurchases

During Q3 FY17, NIKE repurchased a total of 8.9 million shares for approximately $475 million as part of its four-year $12 billion program approved by the Company’s Board of Directors in November 2015. As of February 28, 2017, a total of 64.9 million shares had been repurchased under this program for approximately $3.6 billion.

Stock Performance

On Wednesday, March 29, 2017, NIKE’s share price finished yesterday’s trading session at $56.68, slightly up 0.11%. A total volume of 7.45 million shares exchanged hands. The stock has advanced 10.85% and 3.11% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have surged 11.86%. The stock is trading at a PE ratio of 23.67 and has a dividend yield of 1.27%.

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