NIKE, Inc. (NKE) on March 22, 2016 reported financial results for its fiscal 2016 third quarter ended February 29, 2016. Strong consumer demand drove revenue growth across the NIKE Brand portfolio. Diluted earnings per share grew 22 percent, primarily due to revenue growth, a lower effective tax rate and a lower average share count.
“In the third quarter, NIKE delivered robust and balanced growth across our expansive, powerful portfolio,” said Mark Parker, President and CEO, NIKE, Inc. “We grow by serving the athlete personally every day and, as we unveiled last week, through breakthrough innovation that gives us a foundation for growth for years to come. Combined with our strategic investments, world-class execution and financial discipline, NIKE consistently delivers value to our shareholders.”
Third Quarter Income Statement Review
- Revenues for NIKE, Inc. rose 8 percent to $8 billion, up 14 percent on a currency neutral basis.
- Revenues for the NIKE Brand were $7.6 billion, up 15 percent on a currency neutral basis driven by growth in every geography and nearly all key categories.
- Revenues for Converse were $489 million, down 5 percent on a currency neutral basis, mainly driven by a major system go-live that accelerated orders from the fourth quarter to the third quarter in the prior year.
- Gross margin was 45.9 percent, flat compared to prior year. Gross margin benefitted from higher average selling prices and continued growth in the higher margin Direct to Consumer (DTC) business, which were offset by unfavorable changes in foreign currency exchange rates, higher warehousing costs, and the impact of clearing excess inventory in North America.
- Selling and administrative expense increased 8 percent to $2.6 billion. Demand creation expense was $804 million, up 10 percent compared to the prior year due to increased investments in advertising, brand events, and digital brand marketing. Operating overhead expense increased 7 percent to $1.8 billion, reflecting growth in the DTC business and targeted investments in operational infrastructure and consumer-focused digital capabilities.
NIKE, Inc. earnings per share showed an increasing trend of 24.5% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 246%.Analysts project EPS growth over the next 5 years at 14.13%. It has EPS annual growth over the past 5 fiscal years of 13.9% when sales grew 10. It reported 7.7% sales growth, and 22.2% EPS growth in the last quarter.
The stock is trading at $56.19, up 19.82% from 52-week low of $47.25. The stock trades down -17.39% from its peak of $68.19 and 26.93% above the consensus price target of $71.32. Its volume clocked up at 8.52 million shares which is lower than the average volume of 9.29 million shares. Its market capitalization currently stands at $94.66B.
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