Nike Inc. (NKE +2.77%) announced fiscal fourth-quarter 2017 results on Thursday after the market closed, with solid growth led by strength in both Nike's international and direct-to-consumer businesses. With shares of the sportswear and footwear juggernaut up nearly 8% in after-hours trading, let's take a closer look at how Nike ended its latest fiscal year.
IMAGE SOURCE: NIKE.
Nike results: The raw numbers
| Metric |
Fiscal Q4 2017 |
Fiscal Q4 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$8.677 billion |
$8.244 billion |
5.3% |
|
Net income |
$1.008 billion |
$846 million |
19.1% |
|
Earnings per share (diluted) |
$0.60 |
$0.49 |
22.4% |
Data source: Nike Inc.
What happened with Nike this quarter?
- Revenue increased 7% on a constant-currency basis.
- For perspective, three months ago, Nike told investors to expect revenue to increase at a rate slightly below last quarter's 5% growth. And though we don't pay close attention to Wall Street's demands, consensus estimates called for lower earnings of $0.50 per share on revenue of $8.63 billion.
- NIKE Brand revenue climbed 7% at constant currency, to $8.127 billion, driven by strength in both sportswear and running. Nike also saw double-digit growth in Western Europe, Greater China, and its emerging-market regions.
- Nike Brand direct-to-consumer (DTC) revenue grew 12% year over year.
- Converse revenue increased 10% at constant currency, to $554 million, thanks to a combination of the market transition in Italy and DTC growth.
- North American revenue grew 1%, to $3.753 billion, as 4% growth in footwear revenue, to $2.457 billion, more than offset declines of 2% in apparel -- to $1.142 billion, and 25% in equipment, to $154 million.
- Repurchased 14.9 million shares during the quarter for $820 million, leaving roughly $7.6 billion remaining under a four-year, $12 billion repurchase program approved in late 2015.
- Ended the quarter with $6.2 billion in cash and short-term investments, up $722 million from the same year-ago period.
- During the subsequent conference call, Nike also unveiled it's executing a new pilot program to bring a limited Nike product assortment to Amazon.com in the U.S.
What management had to say
Nike Chairman and CEO Mark Parker stated:
NIKE continues to create both near-term wins in today's dynamic environment and a lasting foundation for future growth. Through our Consumer Direct Offense, we're putting even more firepower behind our greatest opportunities in Fiscal 2018. It will be a big year for NIKE innovation and we'll bring those stories to life through deeper consumer connections in our key cities around the world.
Looking forward
For the current fiscal first quarter of 2018 -- and keeping in mind year-over-year comps are difficult given a combination of the Olympics last year, the European Football Championship, foreign-exchange rates, and Nike's strategic exit from the Golf Equipment business -- Nike expects reported revenue to be flat compared to last year's fiscal Q1. On a normalized basis, however, Nike's growth will remain roughly in line with the rates we've seen in its past couple of quarters.
Looking to the full fiscal year of 2018, Nike expects currency-neutral revenue growth in the mid- to high-single-digit range, with broad geographic growth led by continued strength overseas. In addition, CFO Andy Campion stated Nike expects adjusted gross margin "to expand beyond the high end of our stated long-term goal of 30 to 50 basis points per year."
All things considered, this was another solid performance with which Nike demonstrated its ongoing industry dominance on a global stage. As the company continues to deliver on its long-term goals, it's no surprise to see shares approaching a fresh 52-week high as of this writing.
