Nike missed Q4 profit target despite better sales

Nike missed Q4 profit target despite better sales

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Nike Inc in its fiscal fourth-quarter results posted on Thursday missed analysts’ estimates for earnings per share largely because of the more spending on new product launches and marketing.

The world’s largest sportswear maker though succeeded to post stronger sales in North American and Chinese regions than was expecting the analysts.

In order to increase the demands, Nike adopted the strategy of hiring more celebrities as brand ambassador, increased its marketing efforts around major sporting events and accelerated its product development especially in popular sneaker brand Jordan.

But these efforts charged the company heavily as Nike spent $12.7 billion on these initiatives, raising costs by 10 percent in the past 12 months.

In its fiscal fourth quarter, Nike’s net income dropped to $989 million, or 62 cents per share against the net income of $1.14 billion, or 69 cents per share in the same quarter a year ago, while analysts consensus, according to IBES data from Refinitiv, for the same was 66 cents per share.

However, Nike remained successful to generate revenue of $10.18 billion, which not only rose by 4 percent but also surpassed the analysts’ average estimate of $10.16 billion.

Company’s revenue grew more strongly on the top segments, especially in the North America and China, where company remained closely monitoring. Company generated revenue of $4.17 billion in the North America in the quarter ended May 31, which grew by 7.5 percent from the last year’s revenue which showed a growth pace of 3 percent in the region during the year-ago period.

To show betterment in the North American markets was also important for Nike as its regional sales during the previous quarter was disappointing, due to which Investors were keeping an eye on company’s sales in these markets.

Nike also performed well in Chinese markets as its total sales grew by 22 percent to hit the $1.7 billion mark, which makes up 16.7 percent of the company’s total revenue for the quarter.

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.

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