Nike returns to growth in North America, tops results estimates

Nike Inc topped analysts’ quarterly revenue and profit estimates on Thursday and posted its first sales rise in a year in North America as the world’s largest footwear maker benefited from a flurry of launches.

The Dow component also announced a new four-year, $15 billion buyback program, sending its shares up nearly 8 percent to $77.40 in extended trading and setting them on course to open at a record high on Friday.

Nike has focused on new launches and on a direct-to-customer model of own stores and online sales, while also partnering with Amazon.com Inc, to cushion the blow from bankruptcies of sports retailers such as Sports Authority and Sports Chalet.

The company had at least eight launches during the fourth quarter, including singer Kendrick Lamar’s Cortez Kenny III line of shoes and Air Max 270.

These measures helped Nike reverse three quarters of sales declines in North America, its biggest market, where the sportswear maker has also battled intense competition from Adidas and Puma.

“Our new innovation is winning with consumers, driving significant momentum in our international geographies and a return to growth in North America,” Chief Executive Officer Mark Parker said in a statement.

Sales in the North America rose 2.76 percent, easily beating analysts’ estimate of a 0.98 percent increase, according to Thomson Reuters I/B/E/S.

Nike said its push to sell directly to shoppers and higher average selling prices helped lift fourth-quarter gross margin by 60 basis points to 44.7 percent.

For the full year, sales rose 6 percent to $36.40 billion. The company has set a $50 billion revenue target for 2020.

Nike’s net income rose to $1.14 billion, or 69 cents per share, in the fourth quarter ended May 31, from $1.01 billion, or 60 cents per share, a year earlier.

Excluding one-time items, the company earned 69 cents per share, while analysts had expected 64 cents.

Total revenue rose 12.8 percent to $9.79 billion, also topping expectations of $9.41 billion.

Nike’s stock has risen nearly 14.6 percent this year through Thursday’s close and is the third biggest gainer among the Dow components.