Please ensure Javascript is enabled for purposes of website accessibility

Why Nike Stock Fell Friday

By Daniel Sparks – Updated Apr 14, 2019 at 8:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's why the stock fell even though its earnings per share were better than expected.

What happened

Shares of footwear giant Nike (NKE 0.24%) took a hit on Friday, falling about 6% as of 12:40 p.m. EDT.

The stock's pullback comes after Nike's fiscal 2019 third-quarter earnings release on Thursday afternoon. Shares are likely down following the report because of the company's weaker-than-expected North America sales growth and softer-than-anticipated guidance for its fiscal fourth-quarter revenue.

A Nike shoe

Image source: Nike.

So what

Driven by strength in the company's Nike Direct channel, or sales at company-owned retail stores and digital commerce, fiscal third-quarter revenue rose 7% year over year to $0.9.6 billion. When adjusting to exclude the impact of foreign exchange rates on currencies, revenue rose 11% year over year.

"The Consumer Direct Offense is delivering broad-based growth across all four of our geographies, led by continued momentum in China," said Nike CFO Andy Campion in the company's third-quarter earnings release.

A deceleration in North America sales growth may have disappointed some investors. Sales in the market increased 7% year over year, down from 9% growth in the prior quarter. 

Check out the latest earnings call transcript for Nike.

Now what

In addition, management's guidance for fiscal fourth-quarter revenue to rise at a rate in the low single-digits may signify a greater deceleration than the Street was anticipating. Nike said it expects about six percentage points of foreign exchange rate headwinds during the quarter. On a constant-currency basis, Nike guided for revenue to rise by a "high single-digit" rate. 

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Nike. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NIKE, Inc. Stock Quote
NIKE, Inc.
NKE
$96.29 (0.24%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.