Shares of Nike Inc. rallied after hours on Tuesday after the athletic-gear giant reported third-quarter results that topped expectations.
The maker of sneakers and sports apparel reported third-quarter net income of $1.24 billion, or 79 cents a share, compared with $1.4 billion, or 87 cents a share, in the same quarter a year ago. Revenue increased 14% to $12.39 billion, compared with $10.87 billion in the prior-year quarter.
Analysts polled by FactSet expected earnings per share of 56 cents, on sales of $11.48 billion.
gross margin fell 330 basis points to 43.4%. Inventories stood at $8.9 billion, up 16%, amid “higher product input costs and elevated freight costs.”
For Nike’s fourth quarter, FactSet estimates called for earnings per share of 81 cents, on revenue of $12.55 billion. For the full year, those analysts expected earnings of $3.15 a share, on sales of $50.11 billion.
Shares rose 3.5% after hours. The stock also jumped after Nike’s last earnings report, in December, which also topped estimates.
Nike reported earnings after it cut prices in an effort to clear clothing and other items from its warehouses, following supply-chain hiccups that led to an excess of off-season goods and rising prices for basics. Those higher prices made customers less interested in dropping money on a new pair of sneakers.
However, Jefferies analyst Randal Konik, in a research note last week, suggested that rival Adidas AG’s struggles could become Nike’s gains, as Adidas
finds itself stuck with a bunch of Kanye West-branded shoes. West’s antisemitic remarks last year led to the termination of a collaboration between the two.
“The athletic footwear space is highly fragmented, and we believe that NKE will likely continue to benefit as Adidas regroups,” he said in a note.
Konik said that Jefferies’ own data suggested that holiday-season interest in sneakers was still strong, despite inflation. And he said trends in China were getting better, as that nation’s economy reopens.
Foot Locker Inc.
on Monday said that it had “revitalized” its relationship with Nike — to focus on data-sharing and sneaker culture — after Nike began focusing on selling products online and through its own retail stores. And after weaker sales of Nike products in the past, Foot Locker Chief Executive Mary Dillon said the new arrangement with Nike would return both to growth in 2024.
Shares of Nike are down 4.4% over the past 12 months. By comparison, the S&P 500 Index
is down 10.4% over that period.