Nike shares fell in after-hours trading Tuesday despite a strong fiscal first quarter report that saw the apparel giant top Wall Street’s expectations for both quarterly earnings and revenue.
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The Oregon-based company posted earnings per share of 67 cents on $9.95 billion in quarterly revenue. Analysts had projected earnings of 63 cents on $9.94 billion in revenue.
“Nike’s Consumer Direct Offense, combined with our deep line up of innovation, is driving strong momentum and balanced growth across our entire business,” Nike CEO and Chairman Mark Parker said. “Our expanded digital capabilities are accelerating our complete portfolio and creating value across all dimensions as we connect with and serve consumers.”
Gross margin increased 60 basis points to 44.2 percent, but fell short of Wall Street’s expectations. Shares fell as much as 4 percent in after-hours trading on the gross margin miss.
Nike’s sales grew 6 percent in North America, marking the second straight quarter of growth in the key region despite tough competition from Adidas and Under Armour, which had impacted its revenue in recent quarters. Revenue in China grew 20 percent, but fell slightly short of expectations.
“In North America, we have returned to strong, sustainable growth,” Nike CFO Andy Campion said.
The company has emphasized digital sales and new product offerings for women to address shifts in the sports apparel market and the struggles of some of its brick-and-mortar retail partners.
The apparel giant drew widespread scrutiny earlier this month when it unveiled former NFL quarterback Colin Kaepernick, who was among the first players to kneel during the national anthem to protest police brutality, as the face of a major marketing campaign.
“We know it’s resonated, actually quite strongly, with consumers," Parker said on a conference call, noting that Nike has seen "record engagement" on social media related to the Kaepernick-led campaign.
Quarterly results do not include the sales impact of the Kaepernick campaign, which was announced after the last three-month report period.