Nike Inc (NYSE: NKE) stock fell nearly 3 percent in premarket trading, a day after the company reported fiscal first quarter numbers that exceeded expectations and reassured investors that last quarter’s improvements in North America were no fluke.
Nike started off fiscal 2019 with some positive momentum, but analysts say the stock’s big 2018 gains may leave little room for additional upside.
Nike reported first-quarter adjusted earnings per share of 67 cents on revenue of $9.9 billion on Tuesday after the closing bell. EPS beat consensus estimates of 63 cents, while revenue was in-line with Wall Street forecasts. Revenue was up 9 percent from a year ago.
North American revenue was up 6 percent to $4.14 billion in the first quarter, Nike’s second consecutive quarter of positive growth after three quarters of declines. North American footwear revenue was up 5 percent, apparel revenue was up 8 percent and equipment revenue was down 4 percent.
Europe, Middle East and Africa revenue was up 9 percent to $2.6 billion. Greater China revenue was up 20 percent to $1.37 billion.
Gross margin ticked higher for the second consecutive quarter, rising 0.5 percent to 44.2 percent after nine consecutive quarters of declines.
Nike brand revenue was $9.41 billion, up 10 percent on a currency-neutral basis. Converse revenue was $527 million, up 7 percent.
Nike said it repurchased 17.8 million shares of stock in the first quarter as part of its four-year, $12 billion buyback program.
“NIKE’s Consumer Direct Offense, combined with our deep line up of innovation, is driving strong momentum and balanced growth across our entire business,” CEO Mark Parker says in a statement.
Despite another strong showing from Nike, Bank of America analyst Robert Ohmes says long-term expectations may be too high given the current environment.
“We believe the outlook for Nike in North America remains challenged given the destabilizing shift to digital where [average sales prices] are tracking significantly lower since 2015 and key U.S. retail partners are seeing slowing same-store sales,” Ohmes says.
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