Nike Stomps Expectations with a stellar neighborhood – The Motley Fool

Nike Inc. (NYSE: NKE) announced fiscally better results than expected in the fourth quarter of 2018 on Thursday after market close. The giant of sports shoes and sportswear highlighted not only the sustained momentum of its international markets, but also a surprising early return to growth in North America.

With the shares rising 10% in the operations after the publication hours, let's dig deeper to see better what Nike achieved in recent months and what investors can expect from the company. [19659004] Grid with six different Nike Air Jordan sneakers "src =" "/>


Nike results: raw numbers


Fiscal Q4 2018 *

Fiscal Q4 2017

Year-on-year growth


$ 9.789 billion

$ 8.677 billion


GAAP net gain (loss)

$ 1.137 billion

$ 1,008 thousand million


Gains (losses) GAAP per diluted share

$ 0.69

$ 0.60



What happened with Nike this quarter?

  • By perspective, Nike's revenues came well above the guidance provided in the last quarter, which required a high single-digit percentage growth.
  • The total revenues of the NIKE brand increased by 14% – 9% to constant currency – to $ 9.269 billion, including a double digit percentage growth in NIKE Direct, Sportswear and Global Football.
  • Sales of the international NIKE brand rose in the double-digit range, including a 10% growth in the EMEA region (Europe, the Middle East, and Africa), to $ 2,466 billion, an increase of 35% in Greater China, at $ 1,468 billion, and a 12% increase in Asia Pac. IFIC and the Latin American region, to $ 1,436 billion.
  • The revenues of the Nike brand in North America also rose a surprising 3%, to $ 3.875 billion, above the orientation for more or less flat sales of the same period last year. Recall last quarter, Nike told investors to expect sales in North America to grow again sometime in the first half of fiscal year 2019.
  • Reverse revenue decreased 14% to constant currency, with growth in Asia which partially counteracts the decreases in other regions. Similar to the previous quarter, the decline was mainly driven by Nike's decision to rebalance the wholesale distribution in North America and the EMEA region, although Converse's direct sales increased in the double-digit range during the quarter.
  • Gross margin increased 60 basis points to 44.7%, driven by higher average sales prices, favorable sales mix at full price and margin expansion at Nike Direct.
  • Nike repurchased 23.1 million shares for $ 1.6 billion during the quarter, leaving approximately $ 3.3 billion remaining year, $ 12 billion program approved in November 2015.
  • Today, Nike also announced a new [19659031] $ 15 billion repurchase program for four years that will begin once its existing repurchase authorization has been completed.

What the administration had to say

"Our new innovation is gaining with consumers, driving a significant boost in our international geographies and a return to growth in North America," said Nike's president and CEO, Mark Parker "Driven by a complete digital transformation of our company from end to end, this year laid the foundation for Nike's next wave of sustainable growth and long-term profitability."

Looking ahead

During the following conference call, CFO Andy Campion added that Nike now expects revenue growth for the entire 2019 fiscal year to be in the high single digit range, a slight increase from the previous recommendation of one-half to one-digit growth. Nike also anticipates that gross margin for the entire year will expand by approximately 50 basis points "or a little more" (from 43.8% in fiscal year 2018).

Meanwhile, Nike expects revenue growth in the current fiscal first quarter to rise to the same high single-digit level, with gross margin expanding at a slightly lower rate than its annual guidance for the first half . 19659003] Given everything: the continued expansion of Nike's margin, its sustained international strength, the new mbadive buy-back program and its early return to growth in North America, this was a quarter as strong as Nike investors could have order. And it is difficult to blame the market for making an offer up to the historical maximum in response.

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