Nike Q4 2016 Earnings: Share Price Dips Despite A Strong Quarter

June 30th, 2016 by Trefis Team
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Nike Inc. released its  fiscal Q4 2016 results on June 28th. (Fiscal years end with May.) Despite beating consensus estimates, the company’s stock tumbled. Revenues were up 6%, driven primarily by strong demand from across mostly all geographies. Earnings per share of $0.49 remained relatively flat year on year, adversely affected by by a higher tax rate, a decline in gross margins and higher selling and administrative expenses.

For FY 16, the sports apparel company managed to increase diluted earnings per share by 17% to $2.16. Yearly revenues increased by 6% year on year to $34.2 billion. On the whole, the Nike managed expand gross margins, lower the tax rate and lower the average share count.

Despite the strong numbers, Nike’s stock price fell by about 7% in after hours trading. This was probably because the company fell short of the revenue consensus estimate by about $30 million. Furthermore, The Oregon-based company’s future orders came in much below the anticipated numbers. However, we believe this could be just a temporary dip.

Financial Highlights:

  • The company’s DTC segment accounted for about $7.9 billion, up 25% on a currency neutral basis. Nike received about 51% of these sales from online sales, keeping Nike on the target to grow its e-commerce revenues to 13% of the total revenues by 2020.
  • Nike performed well in Western Europe, China and Japan on the back of a strong football season and further propelled by strong Footwear sales.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our full analysis for Nike

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