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Shares of footwear, athletic apparel, and accessories maker NIKE (NKE - Free Nike Stock Report) were up nearly 6% in pre-market trading on Friday. The rise coincides with the company announcing fiscal fourth-quarter 2017 results (years end May 31st) that surpassed both our and Wall Street's expectations in terms of revenues and earnings.

Sales for the three-month period came in at $8.677 billion, exactly $50 million ahead of our call and an even wider gap to the overall consensus. Strength in the international and direct-to-consumer businesses powered the outperformance. On a constant currency basis, revenues were up 7%. That increase easily eclipsed management's recently reduced guidance that aimed for a comparison slightly below the 5% growth posted in the February interim. The metric was boosted by double-digit gains in Western Europe, Greater China, and its emerging markets. Sportswear and running were two categories that were highlighted as bright spots. Direct-to-consumer sales jumped 12%, while Converse revenues were 10% greater. The North American top line grew 1%, to $3.753 billion. Here, a 4% advance in footwear more than offset a 2% dip in apparel.

From an earnings perspective, share net for the fiscal fourth quarter registered $0.60. We were looking for $0.49, in line with the average call on Wall Street. The strong showing in revenues added a few cents to the bottom line, and was aided by the repurchase of 14.9 million shares during the period. One down note for the quarter was that gross profit margins slipped 180 basis points, on the heels of a 140 basis point dip in the previous period. But, the investment community chose to hone in on management's enthusiasm regarding some new opportunities.

For starters, the NBA is booming, and NIKE has a dominant position there. A marquee matchup in the finals has led into an offseason that has already splashed the headlines with huge news stories. Too, a deal with Amazon was disclosed. The company will sell certain products on the e-commerce conglomerate's site. The increased use of social media, particularly Instagram, is another tidbit that customers are getting excited about. Testing a service that allows consumers to buy sneakers exclusive to them also got some praise.

With fiscal 2018 now a month in, the general belief is that comps will be difficult given that last year's figures included the Olympics, the European Football Championship, and NIKE's strategic exit from the golf equipment business. With that in mind, NIKE is looking for growth rates in line with the rates we have seen over the past few quarters. Time will tell. For now, we are adding $150 million to our top-line call for fiscal 2018, which now stands at $36.75 billion. In turn, NIKE expects adjusted gross margin to expand beyond the high end of its stated long-term goal of 30 to 50 basis points per year. As far as the bottom line goes, we are adding a dime to our estimate, bringing that tally to $2.70 per share.

Our investment advice with regard to this blue-chip equity is that it makes a strong cornerstone for most portfolios. With a Safety ranking of 1 (Highest) and 100 out of 100 scores for Price Growth Persistence and Earnings Predictability, the risk-conscious have a solid selection here. Moreover, above-average capital appreciation potential out to 2020-2022, combined with a decent dividend yield, make it a worthwhile choice for those seeking a secure total-return package. Our primary concern with NIKE is not even an in-house woe, it is the rapidly changing retail landscape. NIKE is making efforts to increase its online presence, and the Amazon pact will further that cause. Still, trends and tastes are clearly evolving among shoppers, who are now more fickle than ever, at a time when competition is ratcheting up, namely Adidas and Under Armour (UAA). Currently, NIKE is the market leader and we look for the company to maintain that position for the foreseeable future. Still, it must evolve and adapt to the changing retail market moving forward.

About The Company: NIKE, Inc. designs, develops, and markets footwear, apparel, equipment, accessories, and services. It sells products to retail accounts, through NIKE-owned retail stores and the Internet, and through a mix of independent distributors and licensees in approximately 190 countries. Subsidiary brands include Converse casual sneakers and Hurley lifestyle apparel and accessories.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.