Nike Shares Climb on Q4 Street Beat

There’s no stopping Nike Inc.

The firm’s share price is rising after it posted an all-around Wall Street beat in its fourth-quarter earnings release. Despite some currency pressures, Nike continues to demonstrate an ability to absorb FX hits and still dominate the athletic-footwear space.

Read on for the earnings breakdown.

Net Income: Net income in the fourth quarter, ended on May 31, 2015, rose 24 percent, to $865 million, compared with the year-ago quarter’s earnings of $698 million.

EPS: Earnings per share rose 26 percent, to 98 cents per share, from 78 cents in the year-ago quarter.

Net Revenue: Net revenues saw 5 percent gains — 13 percent excluding currency shifts — to $7.8 billion, from last year’s comparable-quarter revenues of $7.4 billion.

Revenues for the Nike Brand were $7.4 billion, up 13 percent on a currency-neutral basis, driven by growth in “nearly every geography and key category except Emerging Markets and Global Football,” the firm said in a release.

Revenues for Converse were $435 million, up 14 percent on a currency-neutral basis, mainly driven by market transitions to direct distribution in AGS (Austria, Germany and Switzerland) and strong performance in the U.S., Nike said.

Hit, Miss or Beat: The Beaverton, Ore.-based athletic and apparel firm posted a substantial Street beat. Analyst polled by Yahoo Finance had, on average, predicted revenues of $7.7 billion and EPS of 83 cents.

Executive Insights: “Fiscal 2015 was an outstanding year for Nike,” said Nike President and CEO Mark Parker in a release. “Our consistent growth is fueled by our connection to the consumer and our ability to deliver innovation at an unprecedented pace and scale. At no time in our history has the growth potential been greater for Nike.”

Looking Ahead: For FY2016, the firm expects reported revenue growth in the mid-single digits, reflecting low double-digit growth on a currency-neutral basis, partially offset by the impact of the stronger dollar.

For Q1, Nike anticipates low single-digit reported revenue growth, roughly in line with reported futures growth “as FX comparisons are more challenging in the first half of the fiscal year,” said EVP and CFO Donald Blair on the Q4 conference call.

The firm expects gross margin for Q1 and the full year to expand by about 50 basis points, driven by higher average selling prices and rapid growth in its DTC business, including nike.com. CFO Blair said he also expects to see some benefit from lower oil prices. However, these upsides will be partially offset by ongoing labor-cost inflation, higher prices for some raw materials and FX headwinds, Blair noted.

For SG&A, including both demand creation and operating overhead, Nike expects full-year growth at a mid-single-digit rate.

“For Q1, slightly lower than the full-year rate as we anniversary World Cup investments in the first quarter of FY2015,” said Blair. “We anticipate other income will have a more meaningful impact on our FY2016 results than we’ve seen historically, as a portion of our expected FX hedge gains will be reported in this line item.”

Nike also expects other income to be approximately $50 million for each quarter. For FY 2016, it forecasts that its effective tax rate will be approximately 24 percent.

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