Nike Inc. reported sales that outpaced Wall Street’s expectations while profit fell just short of estimates as the company works to sell off its high stockpiles of merchandise.
Global revenue rose 5% to $12.8 billion in the fiscal fourth quarter ended May 31, above Wall Street’s expectation of $12.6 billion. Gross margin — a key gauge of profitability — was also higher than expected, while earnings per share fell a cent short of Wall Street’s average estimate.
Chief Executive Officer John Donahoe and Nike’s management have been working through excess merchandise with discounts, which has weighed on margins. Inventories rose slightly in the quarter compared with the prior year period. The company attributed a gross margin decline from a year earlier in part on “higher product input costs and elevated freight and logistics costs” along with higher discounts.
Even so, investors may be heartened by Nike’s performance in the Greater China region, a crucial growth market where the company appears to be regaining lost ground. Revenue in the country was $1.8 billion for the quarter, topping analysts’ projections.
The shares slipped 3.7% at 4:49 p.m. on Thursday in late New York trading. The stock has fallen 3.1% this year through Thursday’s close.
(Updates shares and adds detail on gross margin in third paragraph.)
