How Nike Earnings Fell Flat

By Chris Lange Updated Jan 13, 6:15AM EST · Published Jun 28, 4:33PM EDT

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How Nike Earnings Fell Flat — © Thinkstock

Nike, Inc. (NYSE: NKE) reported fiscal fourth-quarter financial results after the markets closed on Tuesday. The company said that it had $0.49 in earnings per share (EPS) on $8.24 billion in revenue. There are consensus estimates from Thomson Reuters that called for $0.48 in EPS on $8.28 billion in revenue. The same period from last year had $0.49 in EPS on $7.78 billion in revenue.

Gross margin fell by 30 basis points to 45.9% as higher average selling prices were more than offset by higher product costs, the negative impact of clearing excess inventory in North America and unfavorable changes in foreign currency exchange rates.

At the end of May 2016, worldwide futures orders for Nike Brand athletic footwear and apparel scheduled for delivery from June through November 2016 totaled $14.9 billion, an 8% increase from orders reported for the same period last year, and 11% higher on a currency neutral basis.

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During the quarter, the company repurchased a total of 9.0 million shares for roughly $540 million as part of its four-year, $12 billion program approved by the board of directors last November.

In terms of its segments Nike reported:

North America revenues remained flat year-over-year at $3.74 billion
Western Europe revenues increased 19% at $1.50 billion
Central & Eastern Europe revenue fell 4% to $345 million
Greater China revenue increased 18% to $979 million
Japan revenue increased 22% to $280 million
Emerging Markets revenue fell 7% to $872 million

Mark Parker, President and CEO of Nike, commented:

Our consistent growth is fueled by innovation, which is why fiscal 2016 was such a breakthrough year for NIKE in everything we do. From product to manufacturing to how we serve our consumers – more personally and at scale – we’ve raised the bar of what’s possible. It’s a great time to be in sports, and the NIKE Brand has never been stronger. Fueled by our unrivaled roster of athletes, fiscal 2017’s calendar of sport moments promises to build on our business momentum and inspire consumers.

On the books, cash, cash equivalents, and short term investments totaled $5.5 billion at the end of the quarter, versus $5.9 billion at the end of the same period from last year.

Shares of Nike closed Tuesday up 2.3% at $53.09, with a consensus analyst price target of $70.52 and a 52-week trading range of $47.25 to $68.19. Following the release of the earnings report, the stock was initially down 6.3% at $49.79 in the after-hours trading session.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.