Nike Misses Q4 Sales Estimates, Global Futures Up 11 Percent

Nike KD9 Release
The Nike KD9 "Premiere."
Courtesy of brand.

Nike Inc.’s shares are slipping in after-market trading — down nearly 7 percent as of 4:38 p.m. ET — after the company reported fourth-quarter sales that missed market watchers’ estimates and global futures growth on the lower end of predictions.

The athletic giant said Tuesday that its Q4 net income decreased 2 percent, to $846 million, from $865 million in the comparable period. Diluted earnings per share remained flat year over year at 49 cents. Analysts had expected diluted EPS to slip to 48 cents per share. International momentum and a lower average share count were offset by a higher tax rate; gross margin pressure due to clearance of excess inventory in North America; and higher selling and administrative expenses, according to the company. Sluggish momentum in North America has been an ongoing concern for Nike in recent quarters — sales in the region remained flat, at $3.7 billion, in Q4 but grew 7 percent for the full year.

Fourth-quarter revenues were up 6 percent year over year, or 9 percent on a currency neutral basis, to $8.2 billion. Market watchers had expected the firm to produce revenues of $8.3 billion.

Sales for the Nike brand were $7.7 billion, up 8 percent on a currency-neutral basis driven by double-digit growth in Western Europe, Greater China, Emerging Markets and Japan and including strong growth in sportswear, global football and the Jordan Brand, according to the firm. Revenues for Converse were $513 million, a 18 percent gain on a currency-neutral basis.

Global futures orders are up 8 percent, or 11 percent on a currency neutral basis, which was at the lower end of market watchers’ forecasts for futures orders growth between 11 and 15 percent. Futures orders in North America were up 6 percent on a currency-neutral basis.

Our consistent growth is fueled by innovation, which is why fiscal 2016 was such a breakthrough year for Nike in everything we do,” said Nike president and CEO Mark Parker in a release. “From product to manufacturing to how we serve our consumers — more personally and at scale — we’ve raised the bar of what’s possible. It’s a great time to be in sports, and the Nike brand has never been stronger. Fueled by our unrivaled roster of athletes, fiscal 2017’s calendar of sport moments promises to build on our business momentum and inspire consumers.

For the full year, total sales advanced 6 percent, or 12 percent on a currency-neutral basis, to $32.4 billion. Revenues for the Nike brand were $30.5 billion, up 13 percent on a currency-neutral basis; revenues for Converse were $2 billion, a 2 percent improvement on a currency-neutral basis.

Nike closed the year with inventories up 12 percent.

The athletic giant’s shares have slipped more than 14 percent quarter to date, and analysts have expressed concerns over deceleration in the brand’s North America futures, higher near-term inventories in the U.S., the health of its basketball business and increased competition from Adidas and Under Armour.