The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
BEAVERTON, United States — Nike Inc. did something highly out of character on Thursday: It missed earnings estimates.
The athletic brand posted profit of 62 cents a share, short of the 66-cent average projection. That hasn’t happened since the middle of 2012, seven years ago.
The company blamed higher overhead expenses, along with a steeper tax bill, for weighing on earnings. Its effective tax rate was 20.4 percent — compared with just 6.4 percent in the year-earlier period, partly due to the tax overhaul passed in 2017.
After the jolt of Nike missing earnings, investors sent the shares down as much as 4.9 percent to $79.56 in extended trading, though they soon took it in stride. As of 5 p.m. in New York, the stock had rebounded and was little changed from the close.
ADVERTISEMENT
Nike’s revenue met projections, reassuring investors that its efforts to find new growth opportunities remain on track. Sales rose 4 percent in the fiscal fourth quarter to $10.2 billion, a record for the world’s largest athletic brand. When holding currency neutral, the increase was 10 percent.
Nike’s growth stalled in 2017, but it’s gotten back on track in the past two years. Still, the increases have been slowing.
Nike remains in a better position than most in the athletic-gear industry amid trade tensions between the US and China. Only about 26 percent of Nike’s footwear and apparel were made in China last year. And according to Susquehanna Financial Group, less than 10 percent of that is imported to the US.
So far, Nike hasn’t been impacted by the trade spat, executives said on a call with investors. In fact, the company continues to source products from China, and sees an opportunity to expand production there, they said.
The company plans to launch its app in China, as well as unveil women’s apparel for the Asian market, in the coming months. Some of the innovations developed for China could eventually make their way into other markets.
"China is putting us in a better position to be a better global company," Chief Executive Officer Mark Parker said on the call.
In December, Parker said 2019 would be a “true tipping point” for women in sports. Nike outfitted 14 of the 24 teams in the ongoing women’s World Cup and expects to see large gains in the category.
The stock was up 13 percent this year through Thursday’s close.
By Eben Novy-Williams and Olga Kharif; editors: Nick Turner and John J. Edwards.
In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.
For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.
A blockbuster public listing should clear the way for other brands to try their luck. That, plus LVMH results and what else to watch for in the coming week.
L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.