Shares of Nike Inc tumbled in Wednesday’s session after the company reported a weak first fiscal quarter earnings report. Nike shares also suffered due to the company’s weak earnings and sales outlook for the current quarter.
Nike shares posted a decline of 34% in their net income that amounted to $950 million or $0.57 per share. Despite the decline, the company beat consensus analysts forecasts of $800 million or forecasts of $0.48 per share. However, this was down from their earnings of $0.73 per share last year and is almost the same as their sales last year of $9.06 billion.
Nike’s profits came at $1.99 per share or $2.37 billion which was considered to be an improvement compared to the same period last year where the company posted a loss of 16 cents per share.
According to the company, the slide in their sales was due to the gross margin decline. For the fiscal quarter, Nike posted a sales of $9.07 billion slightly missing most analysts estimates of $9.08 billion. The company posted that despite their sales in the United States going lower during the quarter, they have been able to record a rise of 5% in their Latin American and Pacific Asia sales. Their sales in China also jumped by 9%.
The company which struggled with growing competition in the past year become the worst performing stock under the Dow Jones Industrial Average last year. This includes the growing presence of online stores or e-commerce sites that offer more options and more affordable prices. Nike then has ventured into increasing their presence online which includes signing a deal months ago with Amazon Inc to start offering its products officially through the platform.
Investors were also given the news that the company would not be disclosing the number of orders in the future. Order numbers have been used in the past to gauge the demand for their products depending on the season. According to Nike, direct selling to their customers has made up most of their revenue and has reached around 28% during the previous fiscal year. Along with this announcement, Nike also stated that it would now solely focus on consumer direct selling as well as increasing their investment in accelerating its supply chain.
Although Nike’s earnings report did not largely miss on analysts estimates, it was their weak outlook for the current quarter that sent their shares tumbling down by more than 5% on Wednesday despite market optimism during the trading session as U.S. President Donald Trump revealed their plans to cut business tax rates. Nike stated on Wednesday that its earnings would decline in the most recent quarter as the company plans to overhaul the business.
Join the best forex broker and follow us for more up to date news and latest stock market news.