How Nike Inc (NKE) Reported Better Than Expected Earnings?

Nike Inc (NYSE:NKE)’s quarterly results benefited from  investments in innovation, as well as, the launch of a number of new products. The company’s results also gained from shift towards casual and comfort from fashion trends. The casual and comfort has been dubbed as ‘athleisure’. As a result, the company’s earnings for the fourth quarter came in well above the Street analysts expectations.

Orders Growth

One of the significant factors that helped Nike Inc (NYSE:NKE)’s quarterly results  was worldwide future orders. Excluding the foreign-currency impact, it would have witnessed 13% growth. That was much higher than the analysts’ estimation of 10.4% gain based on the Consensus Metrix data. The measure is keenly viewed since the investors see them as a substitute for future sales.

In North America, futures orders, excluding the currency impact, witnessed 13% uptick, while Greater China witnessed 22% growth. Similarly, the growth in Japan, Western Europe and Central and Eastern Europe is 20%, 14%, and 17% respectively.

Nike Inc (NYSE:NKE)’s CEO, Mark Parker, said that Nike’s consistent growth was driven by its connection to the consumer. That apart, the ability to deliver innovative products at an extraordinary pace and scale also helped the company’s growth in the fourth quarter.

Improved Margins

The company’s gross margin improved 0.6% to 46.2% in the fourth quarter. The company attributed it to increased average selling prices, as well as, the continued uptick in the high-margin business. The margin would have been still more higher but for the increased logistics and product input costs.

As a result of number of favorable factors, Nike Inc (NYSE:NKE)’s net income jumped 24% to $865 million from $698 million in the year-ago quarter. Similarly, its earnings advanced 25.6% to 98 cents a share from 78 cents a share on the comparable period. Revenue advanced 5% to $7.78 billion. That was much higher than the Street analysts’ expectations of 83 cents a share. Following the results, shares of the company advanced 3.3% in the extended hours of trading on Thursday.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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