Nike Blows Past Profit Forecasts With Help from International & DTC Business

Nike Inc. is gaining in after-hours trading — up more than 3 percent to $54.80 as of 4:20 p.m. ET — after the company’s fourth-quarter earnings significantly topped forecasts.

The athletic giant said its Q4 profits increased 19 percent year-over-year to $1 billion, or 60 cents per diluted share, due primarily to international revenue growth, lower selling and administrative expenses, and a lower tax rate — all of which were slightly offset by a gross margin decline. Analysts had expected the company to post diluted earnings per share of 50 cents. (Nike also noted that a lower average share count contributed to its Q4 results for the 2017 fiscal year.)

The firm’s fourth-quarter revenues also advanced 5 percent to $8.7 billion, topping Wall Street’s average bet for revenues of $8.6 billion.

Q4 revenues for the Nike brand were $8.1 billion, up 7 percent on a currency-neutral basis, driven by double-digit growth in Western Europe, Greater China and the emerging markets, and strong growth in sportswear and running, according to the company.

“Nike continues to create both near-term wins in today’s dynamic environment and a lasting foundation for future growth,” Mark Parker, Nike chairman, president and CEO, said in a release. “Through our Consumer Direct Offense, we’re putting even more firepower behind our greatest opportunities in fiscal 2018. It will be a big year for Nike innovation, and we’ll bring those stories to life through deeper consumer connections in our key cities around the world.”

Nike — which also announced June 15 that it will have to cut 2 percent of its workforce to introduce its new Consumer Direct Offense — has been ramping up its digital focus in recent months and is rumored to be mulling a wholesale-distribution deal with e-commerce giant Amazon. The company said that its latest initiative is aimed at better serving its customers personally and at scale by accelerating innovation and product creation, and moving closer to consumers in key cities.

For the full year, ended May 31, 2017, the firm’s total revenues gained 6 percent to $34.4 billion, up 8 percent on a currency-neutral basis. Net income increased 13 percent to $4.2 billion, or $2.51 per diluted share.

Overall, inventories were $5.1 billion, up 4 percent from May 31, 2016, as a 3 percent decrease in Nike Brand wholesale unit inventories was more than offset by increases in average product cost per unit and growth in the company’s DTC businesses, Nike said.

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