Nike third-quarter earnings surpassed expectations, with an EPS of $0.77 compared to an estimated $0.74.
Revenue for the quarter stood at $12.43 billion, slightly exceeding the estimated $12.31 billion.
Inventory levels were lower than expected at $7.73 billion, compared to an estimate of $8.16 billion.
However, pretax profit slightly missed estimates, coming in at $1.404 billion against an expected $1.41 billion.
The gross margin also fell short of expectations at 44.8%, below the estimated 45.1%.
Nike’s Greater China segment performed well, with revenue hitting $2.08 billion, surpassing the estimated $2.04 billion.
Greater China‘s earnings before interest and taxes (EBIT) reached $722 million, marking a 2.8% year-over-year increase.
Breaking down by region, North America revenue reached $5.07 billion, exceeding the estimated $4.82 billion.
In contrast, EMEA revenue was slightly lower than expected at $3.14 billion, missing the estimate of $3.18 billion.
Asia Pacific & Latin America revenue was reported at $1.65 billion.
Footwear revenue led the product categories at $8.16 billion, followed by apparel at $3.29 billion and equipment at $487 million.
Year-over-year comparisons showed a 3% increase in North America revenue, a 3% decrease in EMEA revenue, a 3% increase in Asia Pacific & Latin America revenue, and a 5% increase in Greater China revenue.
Nike’s Q3 Earnings Press Release Commentary:
CEO John Donahoe emphasized the company’s strategic adjustments to fuel its next phase of growth, citing progress in innovation, brand storytelling, and collaboration with wholesale partners to enhance the marketplace.
CFO Matthew Friend reiterated the focus on achieving robust growth, enhancing operational efficiency, and leveraging the potential of Nike’s latest innovation cycle.
Nike’s Q3 results were largely in line with expectations, slightly exceeding them in some areas. Despite this, the gross margin fell short of targets. However, there’s growing optimism surrounding the company. Inventory levels notably decreased by 13%, signaling positive trends.
The quarter also incurred restructuring charges of $0.3 billion, which, if excluded, would paint an even more favorable picture.
Europe experienced a slowdown of -3%, mirroring the results seen in Adidas. Conversely, China’s performance improved by 5%, albeit mostly due to easier year-over-year comparisons.
The US market demonstrated resilience, posting a 3% increase despite facing tougher comparisons.
While direct sales rose by 2%, digital sales saw a 3% decline.
Moreover, footwear sales dipped by 5% quarter-over-quarter, while revenue from apparel fell by 13%.
In response, the CEO highlighted the company’s efforts to make necessary adjustments to propel Nike’s future growth trajectory.
