Nike (NYSE:NKE) shares shot up 12% and hit a record high after the athletic retailer announced that it topped estimates in its fourth quarter 2018 results, and said it sees a “return to growth” in the United States.
For the quarter ended May 31st, Nike reported net income of $1.1 billion, or 69 cents a share. This is compared to $1 billion, of 60 cents a share in the year ago period. Excluding one-time items, the company saw earnings of 69 cents a share. Analysts had been expecting 64 cents a share.
CEO Mark Parker said during the earnings call, “We had a strong fourth quarter with results that confirm why we’re so excited about potential of the Consumer Direct Offense. The shifts we’ve made to our business and our deeper focus on the three core areas, innovation, direct and speed are igniting the next phase of growth and profitability for NIKE.”
He added, “First, we’re winning with new innovation. We’re leading with platforms, not just products. For example, React and Air Max are scaling through multiple styles and across categories. They’re driving extraordinary growth and brand heat with consumers. Second, our Digital Offense is transforming NIKE from how we connect with consumers to how we deliver products. This is a major shift from operating models of the past to a new digitally powered model of the future. And third, with a more focused strategy, we’re running a more complete portfolio with better balanced growth across geographies and categories.”
He further said, “For the quarter, NIKE, Inc. revenues grew 13% on a reported basis. Specific highlights include our international business growing 23% with Greater China up 35%. We returned to healthy, sustainable growth in North America. Sportswear, a $10 billion business for NIKE had another quarter of double-digit growth. We saw a solid momentum in key performance categories and digital, NIKE Digital was up 41% for the quarter.”
Looking ahead, Nike (NYSE:NKE) has increased its sales outlook for fiscal 2019 and expects revenues to see a growth in the high-single digit percentage rate. Previously the company had expected a mid-to-high range.
The company’s chief of human resources, Monique Matheson, has also said that Nike will make changes to ensure women and minorities are better represented in top jobs at the company.
Analyst Jim Duffy of Stifel commented, “We are encouraged that the Company is embracing change; both culturally and with progressive go to market strategies. Against this backdrop, we expect the Company shows strong evidence of firming fundamentals that make more tangible capacity for the long-term objective high-single digit revenue growth and mid-teens EPS growth.”