Nike sold more sneakers and sports gear in the fourth quarter than Wall Street expected, and helped boost revenue by 4% to just over $ 10 billion.
Its earnings released on Thursday, but missed analysts' expectations with a few pennies a share, and the stock fell by more than 4% in the after-trade before returning. Stocks were trading down 1% at 5 p.m. ET.
Nike earned 62 cents shares on an adjusted basis over the three months ended May 31, short of Wall Street's forecast of 66 cents per share, according to average analyst estimates by Refinitiv.
Revenue for Nike brand, which excludes Converse merchandise, jumped 1
Total sales in North America, excluding exchange rate fluctuations, increased by 8% to $ 4.17 billion. Sales in the China region increased by 22% to $ 1.70 billion.
Nike recently struggled to increase sales in its home grains as rivals in the US such as Adidas and Lululemon – and smaller start-ups such as Outdoor Voices and Rhône – have threatened to take market share with their sports shoes and clothing.
Footwear sales in North America, excluding exchange rate fluctuations, increased by 9% over the last quarter, while Nike's clothing business grew 6% and equipment sales increased by 7%.
The company said the profit margins were damaged this quarter partly due to investments to sell more directly to consumers and less through wholesalers. Nike has had to sell several of its products directly to customers whose dealers like the Sports Authority have filed for bankruptcy and the warehouses are struggling.
It also invests in the supply chain to create new items, such as Vapormax running shoes and stock stores faster for customers. And this is something that gives it a leg up Adidas and Under Armor.
Mark Parker, CEO, said in a statement that the results Nike has built "deeper relationships" with customers worldwide in the quarter. For example, it recently launched a feature in the main application "Nike Fit" that scans the consumer's feet and tells them their exact shoe sizes.
Nike said direct consumer revenue revenues totaled $ 11.8 billion in fiscal 2019, driven by a 35% increase in online sales and the same store growth of 6%. Nike said sales to wholesale customers were up 10% for the year.
However, Nike said that women's business was up with two digits a year and accelerated as fiscal policy 2019 continued. During the fourth quarter more sports bras rolled out in expanded sizes and revolutionized Jordan women's sneakers as it attempted to increase sales to female shoppers. Nike has historically sold much more equipment for men.
"The big unlock we see over the next few years is the opportunity that digital provides," Parker told analysts at a conference call after earning earnings to sell more to women. "Distribution is often one of our biggest barriers, and we continue to discover that when we present the product in a future way, we can take the women's consumer somewhere new and they respond."  Parker added that Nike's direct consumer women's business still surpasses the wholesale channel.
And despite an ongoing trade war between the United States and China, Parker said "we are and remain a brand in China and China". The company said it did not see any impact on the date of its operations from the ongoing tensions abroad. It is said that the consumer mood around Nike in China has actually been quite strong. "
Nike shares closed on Thursday just over 1%.
The stock is up 17% over the past 12 months, bringing the reseller's market value to around $ 131.2 billion, which is also significantly better than S&P. 500 Retail ETF (XRT), which is down 14% from the previous year.