Market Overview

NIKE, Inc. Reports Fiscal 2019 Third Quarter Results


NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal
2019 third quarter ended February 28, 2019. Revenue growth was driven by
broad-based strength across all geographies as well as NIKE Direct, led
by digital.

"In Q3, our team once again drove strong, healthy growth across NIKE's
complete portfolio," said Mark Parker, Chairman, President and CEO,
NIKE, Inc. "Our business momentum is being accelerated by our ability to
scale innovation at a faster pace and expand new digital consumer
experiences around the world."*

Diluted earnings per share for the quarter was $0.68 driven by strong
revenue growth and gross margin expansion, partially offset by higher
selling and administrative expenses. In the prior year period, diluted
loss per share reflected the enactment of the U.S. Tax Cuts and Jobs Act
which has impacted comparability with the current period.

"The Consumer Direct Offense is delivering broad-based growth across all
four of our geographies, led by continued momentum in China," said Andy
Campion, Executive Vice President and Chief Financial Officer, NIKE,
Inc. "We will continue investing in key capabilities to drive NIKE's
digital transformation and fuel strong profitable growth into next
fiscal year and beyond."*

Third Quarter Income Statement Review

  • Revenues for NIKE, Inc. increased 7 percent to
    $9.6 billion, up 11 percent on a currency-neutral basis.**
    • Revenues for the NIKE Brand were $9.1 billion, up 12 percent on a
      currency-neutral basis driven by growth across wholesale and NIKE
      Direct, categories including Sportswear and Jordan, and continued
      double-digit growth across footwear and apparel.
    • Revenues for Converse were $463 million, down 2 percent on a
      currency-neutral basis, mainly driven by double-digit growth in
      Asia and digital which was more than offset by declines in the
      U.S. and Europe.
  • Gross margin increased 130 basis points to 45.1 percent
    primarily driven by higher average selling prices, favorable changes
    in foreign currency exchange rates and growth in NIKE Direct,
    partially offset by higher product costs.
  • Selling and administrative expense increased 12 percent
    to $3.1 billion. Demand creation expense was $865 million, flat to
    prior year. Operating overhead expense increased 17 percent to $2.2
    billion driven primarily by wage-related expenses, which reflect
    critical investments to drive key transformational initiatives for the
    Consumer Direct Offense.
  • The effective tax rate was 14.7 percent, compared to
    179.5 percent for the same period last year which included one-time
    charges related to the enactment of the U.S. Tax Cuts and Jobs Act.
  • Net income was $1.1 billion in the third quarter and diluted
    earnings per share
    was $0.68 driven by strong revenue growth,
    gross margin expansion, the lower effective tax rate and a lower
    average share count, which were slightly offset by higher selling and
    administrative expenses.

February 28, 2019 Balance Sheet Review

  • Inventories for NIKE, Inc. were $5.4 billion, up 1
    percent compared to the prior year period, primarily driven by strong
    demand for key franchises resulting in healthy inventories across all
  • Cash and equivalents and short-term investments were
    $4.0 billion, $705 million lower than last year as share repurchases,
    dividends, and investments in infrastructure more than offset proceeds
    from net income.

Share Repurchases

During the third quarter, NIKE, Inc. repurchased 9.8 million shares for
a total of $754 million. During the quarter, the company completed the
four-year, $12 billion program authorized by the Board of Directors in
November 2015 and commenced a new four-year, $15 billion share
repurchase program which was authorized in June 2018.

Conference Call

NIKE, Inc. management will host a conference call beginning at
approximately 2:00 p.m. PT on March 21, 2019, to review fiscal third
quarter results. The conference call will be broadcast live via webcast
and can be accessed at
For those unable to listen to the live broadcast, an archived version
will be available at the same location through 9:00 p.m. PT, March 28,

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading
designer, marketer and distributor of authentic athletic footwear,
apparel, equipment and accessories for a wide variety of sports and
fitness activities. Wholly-owned NIKE, Inc. subsidiary brands include
Converse, which designs, markets and distributes athletic lifestyle
footwear, apparel and accessories; and Hurley, which designs, markets
and distributes surf and youth lifestyle footwear, apparel and
accessories. For more information, NIKE, Inc.'s earnings releases and
other financial information are available on the Internet at
Individuals can also visit
and follow @NIKE.


The marked paragraph contains forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties are detailed from
time to time in reports filed by NIKE with the U.S. Securities and
Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.


See additional information in the accompanying Divisional
Revenues table regarding this non-GAAP financial measure.


(Tables Follow)

NIKE, Inc.
(Dollars in millions, except per share data)     2/28/2019     2/28/2018     Change     2/28/2019     2/28/2018     Change
Revenues $ 9,611 $ 8,984 7 % $ 28,933 $ 26,608 9 %
Cost of sales       5,272         5,046       4 %       16,092         15,030       7 %
Gross profit 4,339 3,938 10 % 12,841 11,578 11 %
Gross margin 45.1 % 43.8 % 44.4 % 43.5 %
Demand creation expense 865 862 0 % 2,739
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