Nike beats on earnings, revenues miss, shares down 3%

Nike just reported third-quarter results, and beat analysts’ expectations for adjusted profits for a ninth straight quarter.

The company posted adjusted earnings-per-share (EPS) of $0.55 on revenues of $8 billion.

The world’s largest activewear maker by revenue was forecast to post adjusted EPS of $0.49 and revenues totaling $8.20 billion, according to Bloomberg.

Most of the attention is on one metric: futures orders, which reflects the demand for Nike’s products. And this beat expectations, excluding the foreign-currency impact.

Global futures orders excluding FX rose 17%, beating the expectation for 16.1%.

Futures orders in China jumped 36%, far above analysts’ expectation for 20.7%.

Nike shares fell by as much as 3% in after-hours trading. They have rallied 4% this year.

Investors are also paying attention to the company’s gross margins. It was a tough holiday selling season in the US for all sorts of apparel retailers for various reasons, prompting them to give customers heavy discounts.

Gross margin was flat compared to the prior year, at 45.9%. It had been expected to shrink a bit to 45.5%.

Meanwhile, inventories rose 8% to $4.6 billion year-on-year, which Nike says was driven by a 4% increase in wholesale unit inventories of Nike-brand products. This could indicate that retailers bought less during the quarter.

This chart shows the drop in shares after-hours:

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