Nike Stock Dips on Q4 Profit Miss

Shares for Nike Inc. are stumbling in after-hours trading — down more than 2% to $81.69 as of 4:15 pm ET — after the company posted fourth-quarter earnings that missed forecasts.

The Beaverton, Ore.-based athletic giant said greater SG&A costs and a higher tax rate meant its profits during the period fell 13% year over year to $989 million, or 62 cents per share, missing the 66 cents per share analysts had anticipated.

Sales, however, climbed 4% to reach $10.2 billion, in line with market watchers’ forecasts. On a currency-neutral basis, revenues enjoyed better gains at 10%.

Sales for the Nike brand, specifically, were up 10% on a currency-neutral basis to $9.7 billion, with strength in sportswear, Jordan and basketball, according to the company. In the footwear category, sales advanced 6% to $6.5 billion.

Revenues for Converse were $491 million, flat to previous year on a currency-neutral basis, mainly driven by double-digit growth in Asia and digital, which was offset by declines in the U.S. and Europe, the company said.

For the full year, Nike saw profits more than double to $4 billion, or $2.49 per share, on sales of $39.1 billion, a gain of 7% over fiscal 2018.

“FY19 was a pivotal year for Nike as we continue to bring our Consumer Direct Offense to life throughout the marketplace,” said Mark Parker, Nike chairman, president and CEO . “Our distinctive innovation and digital advantage led to accelerated growth across our complete portfolio, while our brand fueled deeper relationships with consumers around the globe.” (Nike’s Consumer Direct Offense is a strategy the company introduced in 2017 that is aimed at accelerating its innovation, speed and direct connection to consumers.)

In the North America market, where the brand had previously seen some deceleration in growth amid rising competition from Adidas and retro labels like Fila and Champion, Nike saw Q4 sales rise 7% year over year to $4.2 billion. Full-year revenues in the region also improved 7% to $15.9 billion.

“Amid foreign exchange volatility, our double-digit currency-neutral revenue growth and expanding ROIC showcase Nike’s unrivaled ability to create extraordinary value for consumers and shareholders over the long term,” said EVP and CFO Andy Campion.

Ahead of today’s results, market watchers — including Susquehanna Financial Group LLLP analyst Sam Poser and Canaccord Genuity Inc. analyst Camilo Lyon — had predicted the firm would see currency fluctuations offset some of its market share gains, although they suggested the overall business remained solid.

“[Nike’s] underlying momentum remains exceptionally strong,” wrote Susquehanna Financial Group analyst Sam Poser. “Digital prowess, a robust product pipeline and improving speed-to-market capabilities should continue to drive high-single-digit FX-neutral revenue growth and margin expansion for the foreseeable future.”

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