• Q4 earnings climb 13% to US$1.1bn.
  • Total revenues also up 13% to $9.8bn, driven by strong double-digit revenue growth in international markets and Nike Direct globally, and a return to growth in North America.
  • FY net income down 54% to $1.9bn, primarily related to the impact of the Tax Act, which offset strong revenue growth.
CEO Mark Parker says the firms new innovation is winning with consumers, driving significant momentum in international geographies and a return to growth in North America

CEO Mark Parker says the firm's new innovation is winning with consumers, driving significant momentum in international geographies and a return to growth in North America

Shares in Nike Inc were up by 9.34% in pre-market trading as the US sporting goods giant reported double-digit increases in both earnings and revenue during the fourth quarter and booked a return to growth in North America, but full-year profits were knocked by the impact of the Tax Cuts and Jobs Act.

Net income in the three months to the end of May grew 13% to US$1.14bn from $1bn a year earlier, primarily due to strong global revenue growth, gross margin expansion and a lower tax rate, which were partially offset by higher selling and administrative expense. Gross margin, meanwhile, increased 60 basis points to 44.7%, thanks to higher average selling prices, margin expansion in Nike Direct and a favourable full-price sales mix.

Total revenues also increased 13%, totalling $9.8bn, up 8% on a currency neutral basis, driven by strong double-digit revenue growth in international markets and Nike Direct globally, and a return to growth in North America.

Sales for the Nike brand grew 9% to $9.3bn, driven by double-digit increases in Nike Direct, international geographies, sportswear, global football and growth in North America.

Nike sportswear, the industry's largest sportswear business, delivered a record quarter with more than $2.6bn in revenue during the period, on a reported basis.

Sales for Converse, meanwhile, slipped 14% to $512m as growth in Asia was more than offset by declines in other territories.

In the group's North America business, sales up 3% to $3.88bn, while sales in Europe, the Middle East and Africa grew 24% to $2.47bn. Greater China sales, meanwhile, were up 35% to $1.47bn, while sales in Asia Pacific and Latin America grew by 12% to reach $1.44bn.

For the full year, however, net income decreased 54% to $1.93bn, primarily related to the impact of the Tax Act, which offset strong revenue growth. Gross margin decreased 80 basis points to 43.8% driven by 90 basis points of unfavourable changes in foreign currency exchange rates.

Total revenues rose 6% to $36.4bn, up 4% on a currency neutral basis. Sales for the Nike brand grew 5% to $34.5bn, while Converse revenues slipped 11% to $1.9bn as growth in Asia was more than offset by declines primarily in North America.

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

New innovation drove more than 80% of Nike's growth, on a currency-neutral basis, over the year, fuelled by the Air VaporMax, React, AirMax 270 and ZoomX platforms.

Meanwhile, Nike also announced that its board of directors has authorised a new four-year, $15bn programme to repurchase shares of Nike's Class B Common Stock. The company anticipates that the current $12bn share repurchase programme will be completed within fiscal 2019, and the new programme will commence upon the completion.

FBR & Co analyst Susan Anderson, notes: "We like Nike's innovation pipeline, international runway, long-term margin catalysts, and the turn we are seeing in North America—but we remain on the sidelines given valuation."