Nike returns to growth in North America, tops estimates
By Nivedita Balu
(Reuters) - Nike Inc (NYSE: NKE) beat fourth-quarter profit and revenue estimates as new launches and focus on direct-to-customer sales helped reverse declining sales in North America for the first time in a year.
The Dow component's shares rose 8 percent to $77.40 and were on track to hit a record at open on Friday after the company also announced a new $15 billion buyback program and said it expected fiscal 2019 revenue at the higher end of its earlier forecast.
The Oregon-based athletic shoe maker has struggled in North America, its biggest market, as it battles tough competition from a resurgent Adidas
Nike has responded with an emphasis on new launches and selling directly to customers through its stores and online, while also partnering with Amazon.com Inc (NASDAQ: AMZN).
The company launched several sneakers in the fourth quarter, including singer Kendrick Lamar's Cortez Kenny III line of shoes.
Nike said its new products in the past 3 months - Air Max 270, VaporMax and Epic React - are already the top 3 selling women's athletic footwear models above $125.
Sales in the North America rose 3.25 percent, easily beating analysts' estimate of a 0.98 percent increase, according to Thomson Reuters I/B/E/S.
"They are probably gaining back some of (the) shelf space they lost," Edward Jones analyst Brian Yarbrough said.
Nike said it expects 2019 revenue to be in the high single-digit range, compared with its earlier forecast of mid-to-high single-digit growth.
"I'm confident we'll use this quarter as a catalyst for growth into fiscal '19 and beyond," Chief Executive Officer Mark Parker said on a call with analysts.
Nike said it expects gross margin to expand roughly 50 basis points or slightly greater in 2019, fueled by full-price sales and growth in its direct-to-customer business.
Fourth-quarter gross margin had expanded 60 basis points to 44.7 percent.
Net income rose to $1.14 billion, or 69 cents per share, in the fourth quarter ended May 31, from $1.01 billion, or 60 cents per share, a year earlier.
Excluding one-time items, the company earned 69 cents per share, beating estimates of 64 cents.
Total revenue rose 12.8 percent to $9.79 billion, also topping estimates of $9.41 billion.
The company, which has set a $50 billion revenue target for 2020, said fiscal 2018 sales rose 6 percent to $36.40 billion.
(This story corrects to say North America sales rose 3.25 percent, not 2.76 percent, in paragraph 7)
(Reporting by Nivedita Balu and Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)