Nike Inc(NYSE: NKE) has reported the adjusted earnings per share of 68 cents in the third quarter ended February 28th, 2017, beating the analysts’ estimates for the adjusted earnings per share of 53 cents. The company had reported the adjusted revenue growth of 5 percent to $8.43 billion in the third quarter, missing the analysts’ estimates for revenue of $8.47 billion. The revenue from the NIKE Brand grew 7 percent to $7.9 billion, on a currency-neutral basis, due to the double-digit growth in Western Europe, Greater China and the Emerging Markets as well as the Sportswear and Jordan Brand categories. As a result, the stock lost over 5.3% in the pre-market session on March 22nd, 2017. NKE stock has fallen 7.91% in the last one year (source: Google Finance).
The revenues for Converse grew 3 percent to $498 million, on a currency-neutral basis, due to the growth in North America. However, the gross margin has contracted 140 basis points to 44.5 percent, due to the higher average selling prices were more than offset by higher product costs, unfavorable changes in foreign exchange rates and the impact of higher off-price sales.
Moreover, NKE would unveil a third Platform later this summer, a next generation cushioning system designed in radical new forms that help runners and baseball runners increase their performance and stay fresher longer.
The company is facing competition from a resurgent Adidas AG, the German sportswear maker, which has reported stronger sales growth and profitability, due to refocusing its efforts on the key North American market. Further, NKE’s results were also hurt by a stronger U.S. dollar, and the company expects that the currency exchange rates will weigh on results through the end of its next fiscal year.
During the third quarter, NKE has repurchased a total of 8.9 million shares for approximately $475 million as part of the four-year, $12 billion program approved by the company’s Board of Directors in November 2015. As of February 28th, 2017, a total of 64.9 million shares had been repurchased by the company under this program for approximately $3.6 billion.
NKE expects the reported revenue to grow in the mid-single-digit range in the fourth quarter, slightly below the third quarter reported rate of growth. On a currency neutral basis, NKE expects the growth in the high single-digit range. NKE continues to see very strong growth in the international geographies, ranging from Greater China to Europe to emerging markets.