Nike’s Q3 earnings and revenue beat despite Covid-19 impact

Investing.com – Nike shares rose in after-hours trading on Tuesday after the sportswear retailer beat earnings and revenue estimates despite disruptions from the Covid-19 pandemic.

Nike (NYSE:NKE) shares rose 5.02% in after-market trading following the report.

Nike reported earnings per share of $0.78 on revenue of $10.10 billion. Analysts surveyed by Investing.com had expected EPS of $0.61 on revenue of $9.91 billion. That compared with EPS of $0.68 on revenue of $9.61 billion in the same period a year earlier. Nike reported EPS of $0.70 on revenue of $10.33 billion in the previous quarter.

The top line was led by growth in Nike Direct, its direct-to-consumer platform, and strong growth in EMEA, APLA and North America, although that was offset by the impact of the Covid-19 pandemic on its China operations, Nike said. Digital sales in China rose more than 30%, while brick-and-mortar retail sales were hit by temporary store closures, the company added.

Nike's Third-Quarter Profits and Revenues Up — Nike’s Third-Quarter Profits and Revenues Up

“In the third quarter, on a currency-neutral basis, Greater China revenue declined 4 percent after 22 consecutive quarters of double-digit growth. However, Greater China revenue grew strongly by double-digits in the first two months of the third quarter, offset by the impact of Covid-19 that began in late January,” Nike said.

Gross margin fell 80 basis points to 44.3%, driven by the impact of the spread of the coronavirus, including lower sales in China, the highest-margin region, as well as deeper discounts to wholesale partners and higher costs related to a planned slowdown in factory production amid efforts to manage future inventories.

Analysts expect Nike to generate earnings per share of $0.53 and revenue of $10.04 billion in the coming quarter.

Nike shares are down 28% year to date, down 31.48% from their 52-week high of $105.62 set on Jan. 22. The company is underperforming the S&P 500, which is down 24.65% year to date.

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