Summary
NIKE, Inc. reported its fiscal third quarter and nine-month results ending February 28, 2018. The company experienced a net loss of $921 million in the third quarter, a significant shift from the net income of $1,141 million in the prior year period. This loss was largely attributed to a substantial $2,030 million income tax expense related to the recently enacted Tax Cuts and Jobs Act (TCJA), primarily due to the one-time transition tax on repatriated foreign earnings. Excluding the impact of the TCJA, the operational performance showed revenue growth, with total revenues increasing by 7% to $9.0 billion for the quarter and 4% to $26.6 billion for the nine months. Despite the reported net loss, the underlying business demonstrated resilience. NIKE Brand revenues grew by 7% in the third quarter, driven by strong performance in international geographies, particularly Greater China and EMEA. The company's strategic shift towards digital commerce continues, with NIKE Direct revenues showing robust growth. Management highlighted investments in innovation, digital capabilities, and key cities as part of its "Consumer Direct Offense" strategy aimed at enhancing consumer connections and driving future growth. Investors should note the significant one-time tax impact on profitability for this period, while focusing on the operational revenue trends and strategic initiatives for long-term value.
Financial Highlights
50 data points| Revenue | $8.98B |
| Cost of Revenue | $5.05B |
| Gross Profit | $3.94B |
| SG&A Expenses | $2.77B |
| Net Income | -$921.00M |
| EPS (Basic) | $-0.57 |
| EPS (Diluted) | $-0.57 |
| Shares Outstanding (Basic) | 1.62B |
| Shares Outstanding (Diluted) | 1.62B |
Key Highlights
- 1Reported a net loss of $921 million for the third quarter of fiscal 2018, primarily due to a $2.03 billion tax expense from the Tax Cuts and Jobs Act (TCJA).
- 2Total revenues increased by 7% to $9.0 billion for the third quarter and 4% to $26.6 billion for the first nine months, driven by growth in the NIKE Brand.
- 3NIKE Brand revenues grew 7% in the third quarter, with strong performance in international geographies (EMEA, Greater China, Asia Pacific & Latin America) partially offset by a decline in North America.
- 4NIKE Direct revenues continued to grow, up 14% on a reported basis and 10% on a currency-neutral basis for the third quarter, with digital commerce sales increasing by 18% (currency-neutral).
- 5Gross margin declined by 70 basis points to 43.8% for the third quarter, impacted by unfavorable foreign currency exchange rates and product mix, partially offset by growth in the higher-margin NIKE Direct business.
- 6Selling and administrative expenses increased by 11% in the third quarter, driven by higher demand creation and operating overhead expenses related to investments in sports marketing and the Consumer Direct Offense.
- 7The company repurchased approximately $2.7 billion of its common stock during the first nine months of fiscal 2018 as part of its ongoing share repurchase program.