Nike shares slide on future orders in Q2
- Q2 earnings grows 23% to US$655m
- Gross margin up 120 bps
- Sales increased 15% to $7.4bn
In western Europe, future orders rose 13%, less than an expected 15%
Sporting goods giant Nike has revealed second-quarter earnings that rose faster than revenue thanks to gross margin expansion - but weak growth in future orders hit its share price.
Net income increased 23% to US$655m in the three months to the end of November, reflecting strong revenue growth and gross margin expansion. Earnings per share increased 25% to $0.74, beating analyst expectations of earnings per share of $0.70 cents, according to a consensus estimate from Thomson Reuters.
Gross margin increased 120 basis points to 45.1%, primarily due to a shift in mix to higher margin products, continued growth in the higher-margin direct-to-consumer (DTC) business and a modest benefit from foreign exchange.
Revenues increased 15% to $7.4bn. Nike brand sales were up 17% to $7bn, with growth in every product type, geography and key category, except golf. Revenues for Converse were up 24% to $434m, driven by continuing growth in existing direct distribution markets as well as market conversions in Europe and Asia.
Shares, however, fell 2.1% to $95.08 in after-hours trading as Nike revealed that in its major market of western Europe, future orders rose 13% - lower than an expected 15%.
Mark Parker, CEO of Nike, said: "Our strong second quarter results once again demonstrate Nike is a growth company. The power of our portfolio continues to unlock growth, as we keep a laser focus on our biggest opportunities. The breadth and depth of that portfolio has helped us consistently deliver strong results - quarter after quarter, year after year."
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