SKX - Nike records margin beat strong sales tally in China for FQ4

2023-06-29 16:32:57 ET

Nike ( NYSE: NKE ) tracked slightly higher in postmarket trading after a mixed FQ4 earnings report was issued by the Oregon-based company. A slight margin beat and strong sales tally out of China helped offset a $0.02 miss on the EPS line.

Revenue increased 16% in Greater China to $1.81B to top the consensus expectation of $1.64B and outpace the revenue growth recorded in Asia Pacific & Latin America (+5%), North America (+5%) and Europe, Middle East, & Africa (+3%). Footwear revenue rose 7% to $8.55B vs. $8.25B consensus, while apparel revenue was flat compared to a year ago at $3.23B vs. $3.25B consensus. Equipment revenue was up 11% to $430M. Nike Direct sales were up 15% to $5.5B on a reported basis vs. $5.13B consensus and were up 18% on a currency-neutral basis. Converse sales growth lagged during the quarter, with a 1% decline.

Gross margin decreased 140 basis points from a year ago to 43.6% of sales, but edged past the consensus mark of 43.5% consensus. The margin decline was primarily due to higher product input costs and elevated freight and logistics costs, higher markdowns, and continued unfavorable changes in net foreign currency exchange rates — partially offset by strategic pricing actions and lapping higher inventory obsolescence reserves in Greater China in the prior period.

Net income for the apparel giant was $1.03B vs. $1.44B a year ago.

Nike ( NKE ) ended the quarter with inventory the same as a year ago at $8.5B. Nike's ( NKE ) cash position at the end of the quarter was $10.7B vs. $13.0B a year ago as cash generated by operations was used for share repurchases, cash dividends, capital expenditures, and the retirement of $500M of debt upon maturity.

Nike CFO Matthew Friend said the company finished the year with mid-teens currency-neutral revenue growth and a healthy marketplace, which he noted set the foundation for sustainable, profitable growth in FY24 and beyond.

Shares of Nike ( NKE ) rose 0.36% in after-hours trading to $113.80 after gaining about 3% in the week ahead of the earnings report.

Nike ( NKE ) typically guides during the earnings conference call. Companies that have a very high trading correlation with Nike following its earnings report include Under Armour ( UAA ), Foot Locker ( FL ), Skechers ( SKX ), Lululemon ( LULU ), as well as Starbucks ( SBUX ) due to the China connection.

More on Nike:

• Nike: Great Company But Limited Upside Due To Valuation
• Nike: Better Buying Opportunities Ahead
• China Sales Slowdown Jeopardizing Nike's Long-Term Guidance
• More articles from Seeking Alpha analysts
• Growth metrics on Nike
• Nike earnings estimates and track record of beats vs. misses
• Seeking Alpha's Quant Rating for Nike

For further details see: