NIKE (NKE) is trading 6% higher premarket after the company beat fourth quarter estimates on the top and bottom line yesterday afternoon.
Earnings per share for the quarter rose 22% to $0.60 driven by global revenue growth, lower selling and administrative expense, a lower tax rate and a lower average share count which were slightly offset by lower gross margin.
Sales rose 5% to $8.7 billion, in-line with guidance calling for mid-single digit growth. Sales growth was in the double digits in the emerging markets, greater China and Western Europe while North American sales were up 1% (all excluding foreign exchange).
Gross margin declined 180 basis points to 44.1% vs. 44.15-44.40% as higher average selling prices were more than offset by unfavorable changes in foreign currency exchange rates and higher product costs.
Inventories for NIKE were $5.1 billion, up 4%, as a 3% decrease in NIKE Brand wholesale unit inventories was more than offset by increases in average product cost per unit and growth in the DTC businesses.
On the call, NIKE guided first quarter results below consensus estimates, calling for flat revenue and gross margin contraction of 150-180 basis points.
Nike guided for fiscal 2018 revenue growth in the mid-single digits with modest gross margin contraction.
Nike also confirmed reports that it will start selling select items directly on Amazon. The footwear and apparel giant also announced plans to sell items on Facebook's uber-popular Instagram app.
NIKE trades at ~23x fiscal 2018 earnings estimates while its German competitor Adidas (ADDYY) trades at ~25x earnings estimates.
NKE is gapping up above its 50 and 200-day moving averages this morning and may find resistance near the 56 and 58 levels.