Nike shares fell late Thursday following the company reporting "weaker-than-expected sales in North America" during Q3 of its FY '18, according to Lauren Thomas of CNBC.com. Although its earnings "topped analysts' expectations," and total revenue was "in-line with estimates, Nike shares sunk" more than 4% after the bell. Nike reported net income of $1.1B compared with a net loss of $921M. Revenue was up 7% during Q3 to $9.611B from $8.984B a year ago. That was "about in-line with what analysts had expected." It marked the "first time in six quarters, though, that Nike didn't top expectations." In North America, sales were up 7% to $3.81B. That was "softer growth than what some people had expected." Meanwhile, Nike said that its digital business increased 36%, as it "continues to invest in online initiatives like its mobile app and customization options for customers" (CNBC.com, 3/21). Nike execs said that they "expect revenue to rise by a high-single-digit percentage" in Q4. The WALL STREET JOURNAL's Khadeeja Safdar notes demand for footwear "has been strong in the U.S." Nike Chair, President & CEO Mark Parker said that the women’s sneaker business is "growing faster than men's, which is an opportunity for his company." Parker: "We see women embracing the sneaker culture more and more every day, so we’re scaling up popular models and creating new models for women specifically" (WALL STREET JOURNAL, 3/22). At presstime, shares of Nike were trading at $83.15, down 5.61% from the close of business Thursday (THE DAILY).
FALLING A LITTLE SHORT: SW Retail Advisors President Stacey Widlitz noted Nike "hit an all-time high last week, so you go into earnings with that." But she added despite North American sales being up 7%, investors were "looking for a little bit more upside at an all-time high" ("Worldwide Exchange," CNBC, 3/22). CNBC's Jim Cramer said there was a "lot of underpromise" by Nike "so they could overdeliver." Cramer: "They're doing a lot right." He added, "The numbers were good but the hype was too great" ("Squawk on the Street," CNBC, 3/22). Barclays retail analyst Matthew McClintock said Nike is "going to be a victim of its own success" as the company "hit revenue that was in line with consensus, but still there was a little bit of elevated expectations beyond consensus" ("Squawk Box," CNBC, 3/22). Meanwhile, Widlitz said over the last four years "you've seen all these retro brands ... that have taken shelf space away from Adidas and Nike." Widlitz: "I feel like, particularly starting in Europe, that that's shifting a little bit, and certainly Nike has pushed back to the forefront" ("Worldwide Exchange," CNBC, 3/22).
STILL GOOD OVERALL: CNBC's Sara Eisen said overall it "looks like a strong quarter" for Nike. Susquehanna Int'l Group Senior Research Analyst Sam Poser said Nike's stock is down most likely due to "expectations going into" the earnings report. Poser added Nike is "one of the best companies out there that really, from all our checks, is just at the beginning of these new initiatives," such as digital and direct-to-consumer ("Closing Bell," CNBC, 3/21). CNBC's Eric Chemi said when listening to Parker, it "almost sounds like you're listening to a tech company and their earnings rather than a shoe company." CNBC contributor Tim Seymour said "innovation at Nike is back," which is "allowing these guys to have major pricing power" ("Fast Money," CNBC, 3/21).
