Nike Inc.’s continued outperformance in some regions is helping the athletic apparel and accessories giant win the activewear games.
The Beaverton, Ore.-based firm, which includes the Jordan and Converse brands, revealed quarterly earnings Monday after the market closed, improving on topline revenues, thanks to strength in the North American and European businesses, but falling short on bottom-line profits.
Investors didn’t seem to mind. Company shares shot up more than 6 percent during after-hours trading.
“Nike’s strong results this quarter show that our Consumer Direct Acceleration strategy is working, as we invest to achieve our growth opportunities,” John Donahoe, Nike’s president and chief executive officer, said in a statement. “Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport.”
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For the three-month period ending Feb. 28, total company revenues topped $10.8 billion, up from $10.3 billion the same time last year. Sales in Nike’s direct business rose 15 percent to $4.6 billion during the quarter, year-over-year, while revenues in Nike’s digital business grew 19 percent — 33 percent in North America alone — during the same time frame. The company added that traffic in Nike-owned stores increased about 14 percent during the quarter.
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By brand, revenues at Nike increased 8 percent, year-over-year, to $10.3 billion, led by strength in Europe, the Middle East and Africa. At Converse, total sales fell 1 percent during the quarter to $567 million.
On Monday evening’s conference call with analysts, Donahoe called out strength in sneakers and higher full-price sell-throughs, and said there’s continued opportunity in women’s apparel, livestreaming and the Jordan business. He added that a “Jordan-only retail concept” — a concept that has been successful in China — is coming to North America later this year.
“It’s clear that our strategy is working,” Donahoe told analysts. “We stay in the lead and continue to drive further competitive separation. I would not trade our position with anyone.”
The company logged earnings of $1.39 billion for the quarter, down from $1.44 billion a year ago.
“Our third-quarter results demonstrate Nike’s ability to navigate through volatility, while continuing to serve consumers directly and digitally, at scale,” said Matt Friend, Nike’s executive vice president and chief financial officer. “Marketplace demand continues to significantly exceed available inventory supply, with a healthy pull market across our geographies.”
Growth in Nike’s digital business Stateside, in Europe, the Middle East and Africa also helped offset declines in Greater China.
Still, headwinds loomed in China during the most recent quarter, causing total sales to fall 5 percent, the digital business down 19 percent.
In addition, while all factories in Vietnam are fully operational, Friend said transit times “have worsened” during the current quarter, particularly for shipments entering the North American market.
Company executives on the call also said digital operations in Ukraine and Russia remain on pause for the moment, adding that less than 1 percent of Nike’s total revenue stream comes from those countries.
But Friend told analysts that the company still expects full-year revenues to grow in the mid-single digit range, compared with last year’s numbers.
“Nike will always be a growth company,” he said. “Consumers desire to wear athletic apparel in all areas of their lives is here to stay.”
The company ended the quarter with $8.7 billion in cash and cash equivalents and $9.4 billion in long-term debts.
Shares of Nike, which closed down 0.88 percent Monday to $130.08, are down 5.9 percent, year-over-year.