Nike reports third quarter fiscal 2019 earnings

Nike shares tumbled Thursday following the sneaker maker reporting weaker-than-expected sales in North America during its fiscal third quarter, hurt, in part, by fewer people buying Converse-branded merchandise.

Although its earnings topped analysts’ expectations, in addition to total revenue was in-line with estimates, Nike shares sunk more than 4 percent after the bell on the news. The stock had closed the day at a record high of $88.01.

Here’s what Nike reported for its fiscal third quarter compared with what analysts were expecting, based on a poll by Refinitiv:

* Earnings per share, adjusted: 68 cents vs. 65 cents expected
* Revenue: $9.611 billion vs. $9.612 billion expected

“Our business momentum will be being accelerated by our ability to scale innovation at a faster pace in addition to expand brand new digital consumer experiences around the earth,” CEO Mark Parker said. The company also called out “continued momentum in China,” a geography This kind of’s said This kind of’s still “bullish” about despite uncertainty about tariffs.

“We have great momentum in China, however we are still far by realizing the long-term opportunity in This kind of market,” CFO Andy Campion told analysts.

Nike reported net income of $1.1 billion, or 68 cents a share, compared that has a net loss of $921 million, or a loss of 57 cents per share, a year ago. Earnings per share came in 3 cents ahead of analysts’ expectations, based on a survey by Refinitiv.

Revenue was up 7 percent during the quarter to $9.611 billion by $8.984 billion a year ago. that will was about in-line with what analysts had expected. This kind of marked once in six quarters, though, that will Nike didn’t top expectations.

Within that will, sales at the Converse shoe brand were down 2 percent to $463 million, primarily driven by declines inside the U.S. in addition to Europe, the company said.

In North America, sales were up 7 percent to $3.81 billion, excluding currency alterations. that will was softer growth than what some people had expected. Telsey Advisory Group analyst Cristina Fernandez was calling for North American sales to be up 10 percent during the third quarter.

In Europe, the Middle East in addition to Africa, sales were up 12 percent, excluding currency alterations, Nike said. In China, revenue climbed 24 percent. in addition to in Asia Pacific in addition to Latin America, sales grew 14 percent, as Nike’s business continues to grow more overseas than inside the U.S., which remains saturated with competition by the likes of Adidas, Under Armour in addition to Vans.

Nike said its digital business surged 36 percent, as This kind of continues to invest in online initiatives like its mobile app in addition to customization options for customers. The company said shoppers using its Nike retail app to shop average 40 percent higher sales than those people who don’t.

This kind of added traffic in addition to sales through its “Snkrs” app — which sells limited-edition shoes using collaborations with athletes, celebrities in addition to universities — climbed triple digits during the quarter.

Hoping to keep building momentum for its brand, Nike’s focus has shifted by its wholesale partners to today selling as much as This kind of can directly to consumers, through its own stores in addition to website. that will’s evidenced by Nike’s recent store openings, which include a high-tech flagship location in brand new York on Fifth Avenue, in addition to a brand new smaller-format store This kind of’s testing in Los Angeles. Nike’s online business, meanwhile, has been strong as long as the company has innovated with brand new products — like the Air Max 720 in addition to the Epic React Flyknit 2 — in addition to exclusive launches that will drive traffic to the website.

“The innovation pipeline will be full at Nike in addition to This kind of gives us great confidence that will we’ll continue to win with the consumers for years to come,” Parker said.

Looking for pockets of growth, Nike has said This kind of plans to invest more in apparel — for both men in addition to women — in addition to women’s products inside the future. For female customers, This kind of’s launching more items like yoga pants in addition to sports bras in expanded sizes. The company said, as of the third quarter, its Jordan business for women will be growing at a double-digit rate, in addition to women are “embracing the sneaker culture more in addition to more every day.”

“The women’s business will be over-indexing our men’s growth,” Parker said. “in addition to we see … tremendous opportunity moving forward. … We’ve had [a] real strong response to the Nike yoga collection.”

Nike will be, meanwhile, supposed to have benefited as rival sneaker maker Adidas’ North American sales growth has decelerated. Adidas has said This kind of will face “supply chain shortages” in 2019, as This kind of’s struggling to come up with brand new styles that will pique customers’ interests.

“We foresee continued share erosion [at Adidas] due to Nike’s superior product platform,” Jefferies analyst Randal Konik said ahead of Thursday’s report.

One cloud hanging over Nike ahead of Thursday’s results: The company was caught up in controversy recently when Duke University star basketball player Zion Williamson blew through his Nike sneakers during a basketball game in addition to sprained his knee. Nike shares fell following the debacle. The company responded by sending a team of sneaker designers to Duke in North Carolina, in addition to then to China, to make a brand new shoe for Williamson, who has since returned to playing basketball after having to sit out some games with his injury.

however there was no mention of Williamson during Thursday’s earnings conference call.

Nike did say This kind of repurchased 9.8 million shares, worth $754 million, during the quarter.

As of Thursday’s market close, Nike shares are up more than 30 percent over the past 12 months. The stock has climbed nearly 18 percent just This kind of year.