Nike Inc (NYSE: NKE) stock was set to open nearly 10 percent higher on Friday after the company reported fiscal fourth quarter numbers that were ahead of expectations and demonstrated improving trends in its North American business. Perhaps the best news for Nike investors is that gross margins were higher in the quarter, and analysts say Nike is well-positioned for strong growth in fiscal 2019.
Nike reported fourth-quarter adjusted earnings per share of 69 cents on revenue of $9.8 billion on Thursday after the closing bell. Both numbers beat consensus estimates of 64 cents and $9.4 billion, respectively. Revenue was up 13 percent from a year ago.
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North American revenue, which has been down for three consecutive quarters, was up 3 percent to in the fourth quarter to $3.87 billion. North American footwear revenue was up 3 percent, apparel revenue was up 6 percent and equipment revenue was down 7 percent.
Europe, Middle East and Africa revenue was up 24 percent to $2.46 billion. Greater China revenue was up 35 percent to $1.46 billion.
Gross margins ticked higher by 0.6 percent to 44.7 percent after nine consecutive quarters of declines.
Nike brand revenue was $9.3 billion, up 9 percent on a currency-neutral basis. Converse revenue was $512 million, down 14 percent.
Jordan brand revenue continued to be a weak spot in the fourth quarter, declining 8 percent to $2.85 billion. Nike Basketball brand revenue was strong overall, gaining 16 percent to $1.49 billion.
“Our new innovation is winning with consumers, driving significant momentum in our international geographies and a return to growth in North America,” CEO Mark Parker says in a statement. “Fueled by a complete digital transformation of our company end-to-end, this year set the foundation for Nike’s next wave of long-term, sustainable growth and profitability.”
Nike also announced a new $15 billion share repurchase program and said it expects the current buyback program to be completed by the end of fiscal 2019.
CFRA analyst Tuna Amobi says Nike’s international business and innovation will drive growth as long as North America can remain stable.
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“We see NKE further leveraging its product innovation to drive consumer demand across various price points, and applying consumer insights from its [direct-to-consumer] business to deliver the right assortments to its wholesale partners,” Amobi says.
CFRA has a “hold” rating and $68 price target for NKE stock.
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Nike Inc (NKE) Has Its North American Business Back on Track originally appeared on usnews.com
