Nike’s Profit Soars 20 Percent, But Its Sales Miss the Mark

Nike today reported a mixed bag of third-quarter earnings results: Its profit blew past forecasts while its sales fell short, albeit slightly.

The Beaverton, Oregon–based athletic giant’s Q3 profit climbed 20 percent, to $1.14 billion, or 68 cents per share, significantly surpassing Wall Street’s bets for earnings per diluted share of 53 cents.

Revenues, on the other hand, advanced 5 percent year-over-year, to $8.4 billion, but missed analysts’ expectations for revenues of $8.5 billion.

Nike chairman, president and CEO Mark Parker said the firm delivered “another solid quarter of growth and profitability” but is seeking to ramp up its efforts through innovation.

“To expand our leadership and ignite Nike’s next phase of growth, we’re delivering a relentless flow of innovation through performance and style, increasing speed throughout the business and creating more direct connections with consumers leveraging digital and membership,” Parker said in a release.

In the face of intensifying competition from Adidas, in particular, several analysts had started to temper their expectations for Nike in recent quarters.

Ahead of today’s results, Canaccord Genuity analyst Camilo Lyon — who cites a lack of exciting product and slipping market share, among other things — gave a lackluster early read of the firm’s third quarter.

“Nike’s stock is up 13 percent year-to-date on expectations that it will regain its footing and re-accelerate its revenue growth,” Lyon wrote in a March 17 memo. “However, we believe it will not be until spring ’18 at the earliest when we [will] see a material improvement in its assortment that can compete with Adidas’ strong offering.”

Meanwhile, Susquehanna Financial Group analyst Sam Poser, rating Nike a buy, said he continues to expect a stellar performance from the athletic footwear and apparel leader.

“Nike innovation is robust, value has been enhanced and engagement is improving,” Poser wrote on March 15. “Nike is marrying performance and lifestyle attributes in a way that resonates deeply. 3Q17 marks an inflection for revenue and futures.”

As expected, Nike did not provide its futures orders tally in its initial earnings release today. (Futures orders — a calculation of merchandise the company has committed to delivering to retailers during the next six months — are a unique measure for Nike and have long been regarded as a key indicator of its growth.)

In tandem with weakening futures last September, the company told investors that it would change how it reports futures results. Instead of reporting futures as a standalone metric in its earnings releases, as it had done up until that point, it will now just include them in U.S. Securities and Exchange filings and discuss them on quarterly conference calls with investors.

As of 4:45 p.m., Nike shares had stumbled nearly 2 percent, to $57.07.

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