Nike’s pace is slowing, but the performance giant still ended its fiscal third quarter with profits up 20 percent.
On Tuesday, the company reported Q3 profit totaled $950 million, or 55 cents per diluted share. Revenue rose 8 percent to $8 billion, up 14 percent on a currency neutral basis, however it missed analysts’ average estimate of $8.2 billion.
Revenues for the Nike Brand were $7.6 billion, up 15 percent on a currency neutral basis driven by growth in every geography and nearly all key categories. Nike Brand footwear revenue increased 11 percent to $5.07 billion from $4.5 billion one year ago.
Converse, however, reported a 5 percent decline with revenue totaling $489 million, mainly driven by a major system go-live that accelerated orders from the fourth quarter to the third quarter in the prior year, Nike reported.
Nike’s selling and administrative expenses rose 8 percent to $2.6 billion. Demand creation expense was $804 million, up 10 percent compared to the prior year due to increased investments in advertising, brand events and digital brand marketing.
Operating overhead expenses increased 7 percent to $1.8 billion, as the company grew its direct-to-consumer (DTC) business and made investments in operational infrastructure and consumer-focused digital capabilities.
Inventories for Nike were $4.6 billion, up 8 percent from Feb. 28, 2015. The company said the increase was driven by a 4 percent increase in Nike Brand wholesale unit inventories, growth in its DTC business and increases in average product cost per unit which were partially offset by changes in the value of inventories due to foreign currency exchange rates.
In a press release Nike Inc. President and CEO Mark Parker said, “In the third quarter, Nike delivered robust and balanced growth across our expansive, powerful portfolio.” He added, “We grow by serving the athlete personally every day and, as we unveiled last week, through breakthrough innovation that gives us a foundation for growth for years to come. Combined with our strategic investments, world-class execution and financial discipline, Nike consistently delivers value to our shareholders.”
As of the end of the quarter, worldwide futures orders for Nike Brand athletic footwear and apparel scheduled for delivery from March 2016 through July 2016 were 12 percent higher than orders reported for the same period last year.