Nike Misses Q3 Revenue Forecasts, Beats On Earnings

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Nike Football men's and women's Radiant Reveal Pack for spring.
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Although Nike Inc. is accustomed to blowing past Wall Street’s forecasts, Q3 wasn’t a complete win for the brand.

The athletic footwear-and-apparel giant announced today, after the market close, that its third-quarter earnings rose 20 percent in the third quarter, to $950 million, or 55 cents per diluted share. It was a beat against market watchers’ projections for diluted earnings per share of 49 cents.

Revenues, however, fell below expectations. Nike said its sales in the third quarter rose 8 percent, or 14 percent on a currency-neutral basis, to $8 billion, from $7.5 billion in the comparable period. Analysts were betting on sales of $8.2 billion.

The modest miss was enough to drive the firm’s shares down in after market trading. At 4:30 p.m. EST, Nike’s share price had slid 2.7 percent.

In the third quarter, Nike delivered robust and balanced growth across our expansive, powerful portfolio,” said Nike president and CEO Mark Parker in a release. “We grow by serving the athlete personally every day and, as we unveiled last week, through breakthrough innovation that gives us a foundation for growth for years to come. Combined with our strategic investments, world-class execution and financial discipline, Nike consistently delivers value to our shareholders.”

Revenues for the Nike brand were $7.6 billion, up 15 percent on a currency-neutral basis while sales at Converse were $489 million, down 5 percent on a currency-neutral basis.

Inventory overages have been the earnings story for the past two quarters, with many footwear-and-apparel brands struggling to right-size levels after a lackluster holiday season and unseasonable weather going as far back as September. Nike’s inventory growth, at 8 percent, matched sales growth in the quarter.

After Q2’s headline-making 20 percent futures order growth, market watchers had also been anxiously awaiting the brand’s futures orders growth — and the firm did not disappoint. Nike said its worldwide futures orders, scheduled for delivery from March through July 2016, were 12 percent higher than orders reported for the same period last year. Excluding currency changes, futures orders would have increased 17 percent.