U.S. Markets closed

Nike smashes expectations, stock surges

Nike (NKE) reported quarterly results that beat Wall Street’s estimates on the top and bottom lines. The athletic apparel giant also improved its gross profit margins and posted strong sales in North America and China for the quarter.

The Beaverton, Oregon-based company delivered adjusted earnings of 52 cents per share, exceeding consensus estimates of 46 cents per share, according to Bloomberg data. Revenue came in at $9.37 billion for the quarter, also beating estimates of $9.17 billion.

The sportswear brand posted gross profit margins of 43.8% for the quarter, exceeding consensus estimates of 43.5%. Last quarter, gross margins had come in slightly weak, missing estimates by 10 basis points.

Shares of Nike surged 8.1% to $73.00 each as 4:26 p.m. ET following the results.

“Nike’s ambitious digital transformation is driving strong results and momentum in North America and in our international geographies,” Mark Parker, chairman and CEO of Nike, said in a statement. “We’re incredibly energized about 2019 – with a full innovation pipeline; the most personal, responsive retail experiences in the industry; and a supply chain that’s delivering speed at scale.”

The latest earnings results, which capture the three months ending in November, encapsulate the debut of Nike’s controversial advertisement featuring former San Francisco 49ers quarterback Colin Kaepernick in early September. The stock initially fell and then jumped following the launch of the Kaepernick campaign but has limped along in the months following as geopolitical concerns have weighed on apparel and footwear stocks with potential exposure to trade-related factors.

Nike’s stock has tumbled about 20% since hitting an all-time intraday high of $86.04 per share on September 21. The stock was up 7% for the year-to-date as of market close Thursday.

Analysts have pointed to growth in North American sales as a source of strength for the company. Nike executives said during a conference call last quarter that the company was on track for “strong, sustainable growth” in its key North American market.

North American revenue for the fiscal second quarter of 2019 was $3.78 billion, outpacing estimates of $3.7 billion. The company also beat expectations for revenue in Greater China, which totaled $1.54 billion versus $1.43 billion anticipated.

“Looking into 2019, we see sales momentum continuing from the global rollout of its digital initiatives (such as NikePlus membership and SNKRS app), market share gains in North America, and continued strength in China, combined with operating margin expansion stemming from product innovation, supply chain benefits and digital growth,” Cristina Fernandez, an analyst with Telsey Advisory Group, wrote in a note ahead of results.

Nike’s retail partners have recently pointed to strength in demand for the brand among U.S. consumers. Foot Locker (FL) executives said on a conference call in November that Nike Air Max shoes helped lift footwear sales, while Dick’s Sporting Goods (DKS) executives said that they were “extremely pleased with Nike on both the footwear side and the apparel side.”

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.

Read more from Emily:

Why the Huawei arrest is a huge problem for U.S.-China trade relations

Netflix user growth beats expectations, shares spike

Now is a ‘once-in-a-lifetime chance’ to invest in US pot companies, investor says

There are ‘4 headwinds’ facing markets rights now

Ark Invest CEO: Tesla ‘is a replay of Apple’

China’s slowing economy could be a problem for Apple