NKE Stock Plunges After Earnings
Nike Inc (NYSE:NKE) stock tumbled more than four percent in after-hours trading on Tuesday. Why? The company just reported earnings.
On Tuesday, Nike reported financial results for the first quarter of its fiscal 2017 which ended August 31, 2016. Revenue grew eight percent year-over-year, to $9.1 billion, which also beat Wall Street’s expectation of $8.87 billion. On a currency neutral basis, revenue would have been up by ten percent. (Source: “Nike, Inc. Reports Fiscal 2017 First Quarter Results,” Nike Inc, September 27, 2016.)
The bottom line improved as well. For the quarter, earnings came in at 73 cents per share, up nine percent year-over-year and smashed analysts’ estimate of 56 cents per share.
“Fueled by an incredible summer of sport, Nike delivered strong global growth—and led the industry through disruptive innovation,” said Nike’s Chairman, President, and Chief Executive Officer Mark Parker in a statement on Tuesday.
“Q1 also showed how we’re amplifying every category through sports style innovation, transforming retail by connecting the digital and physical experience and ushering in a new Era of Personalized Performance – through product, consumer connections and our supply chain. NIKE’s strategic investments in these growth opportunities continue to deliver long-term value to our shareholders,” he continued. (Source: Ibid.)
In the quarter, the company spent approximately $1.1 billion repurchasing a total of 19.0 million of its own shares as part of its four-year, $12.0 billion program.
So, with solid growth in both top and bottom line, why is Nike stock down so much?
Well, the answer lies in futures orders. Nike said that futures orders for Nike brand athletic apparel and footwear scheduled for delivery from September 2016 through January 2017 totaled $12.3 billion. While the number is seven percent higher on a currency neutral basis compared to last year, analysts were expecting a year-over-year increase of between nine and 10 percent.
After the earnings release, Nike stock slipped as much as 4.45% in after-hours trading on Tuesday. Year-to-date, NKE stock has plunged 15.3%.