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What Investors Need to Know About Nike's 3rd-Quarter Earnings

- By Mayank Marwah

Nike Inc. (NKE) reported fiscal third-quarter 2019 results after the market closed on March 21. The company's earnings edged past analysts' expectations while its revenue was in line with estimates. Softer growth in North America, however, disappointed investors.

Key metrics

For the three months ending in February, the footwear company posted earnings of 68 cents per share, ahead of Wall Street's estimates of 71 cents. Revenue grew 7% from the prior-year quarter to $9.61 billion.


"Our business momentum is being accelerated by our ability to scale innovation at a faster pace and expand new digital consumer experiences around the world," CEO Mark Parker said.

The gross margin improved 1.3% during the quarter to 45.1% due to a higher average selling price. Selling and administrative expenses amounted to $3.1 billion, up 12% year over year as the company continued expanding its online platform, improving its supply chain and marketing operations.

Segment performance

The Oregon-based company said its e-commerce sales surged 36% as it continues to invest in online initiatives such as a mobile application.

By region, North America sales grew 7% to $3.81 billion, which was slightly below analysts' projections of 10% growth.

Overseas, however, the business' expansion continued to gain momentum. Sales in Europe, the Middle East and Africa climbed 12%, excluding currency changes. In China, revenue increased 24% and sales in Asia Pacific and Latin America rose 14%.

Future prospects

As it looks for new avenues of growth, Nike is planning to invest in men's and women's apparel as well as introduce more products for women.

To appeal to female consumers, the company is rolling out yoga pants and sports bras in expanded sizes. In addition, as women are "embracing the sneaker culture more and more every day," Nike's Jordan business grew at a double-digit rate during the third quarter.

"The women's business is over-indexing our men's growth," Parker said."And we see... tremendous opportunity moving forward... We've had a real strong response to the Nike yoga collection."

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.