Nike tops analysts’ estimate for revenue in the third quarter but falls shy on earnings

Nike (NYSE:NKE) announced its quarterly financial results on Tuesday that beat analysts’ expectations for sales in the third quarter. Nike attributed its success to upbeat performance in the North American market and increased online sales that contributed to offsetting the weaker performance in China amidst the Coronavirus crisis.

In
premarket trading, Nike gained 9% in the stock market on Wednesday. At £67.40
per share, the
sports apparel maker is still trading around 20% down year-to-date. Its
performance in 2019, on the contrary, was reported largely upbeat with an
annual gain of around 40%. Nike currently has a market cap of £75.72 billion
with a price to earnings ratio of 26.76.

CEO
John Donahoe Says Nike Is Recovering Quickly In China

According
to CEO John Donahoe, Nike is starting to recover in China. In Q3, the COVID-19
outbreak resulted in a 5% decline in its sales in Greater China that marked the
1^st for Nike after posting a double-digit-growth for 22 quarters in
a row.

Nike
highlighted in its earnings report on Tuesday that in February, Nike
had closed around 75% of its stores in mainland China while the rest of
them resorted to reducing the working hours. The company, however, has now
resumed operations at 80% of its stores in mainland China. Digital sales, as
per Nike, increased by 30% in mainland China in the third quarter.

Nike
refrained from giving financial guidance for the fourth quarter amidst the
Coronavirus driven uncertainty. It, however, expressed confidence that mainland
China will climb into the growth zone before the end of the year.

Nike’s
Earnings In The Third Quarter Included A 21-Pence Charge

Despite
an increase in Nike’s revenue to £8.51 billion in Q3 versus £8.09 billion last
year, Q3 earnings fell shy ascribed to business disruptions amidst the health
emergency. At £713.72 million (£0.44 per share), Nike’s net income was
significantly lower than £930 million (£0.57 per share) in the same quarter
last year.

In
the recent quarter, Nike’s earnings encompassed a 21-pence charge attributed to
transitioning its Argentina, Uruguay, Brazil, and Chile businesses to a new
distributor model. Nike’s earnings in Q3 adjusted for the aforementioned charge
topped the experts’ forecast of £0.50 per share. On the revenue front, analysts
were expecting the company to print £8.26 billion in the recent quarter.

Other
prominent figures included in Nike’s performance results on Tuesday included a
13% growth in its direct-to-consumer business and a massive 36% increase in
digital sales.