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Nike shares rise as sales, earnings top estimates

CNBC logo CNBC 20/12/2016 Krystina Gustafson

Shares of Nike (NKE) rose 2 percent in after-hours trading Tuesday, after the world's largest athletic wear firm beat Wall Street's earnings and revenue expectations.

The company's sales rose 6 percent during the fiscal second quarter, to $8.18 billion. Earnings per share came in at 50 cents, topping the Thomson Reuters consensus that called for a profit 43 cents a share.

Analysts had predicted Nike would pull in $8.09 billion in revenue, according to the consensus estimate. In the prior-year period, the company earned 45 cents a share on $7.69 billion in revenue.

"With industry-defining innovation platforms, highly anticipated signature basketball styles and more personalized retail experiences on the horizon, we are well-positioned to carry our momentum into the back half of the fiscal year and beyond," CEO Mark Parker said.

The company's earnings got a boost from more favorable selling and administrative expenses and a lower average share count.

Nike's stock has been a rare laggard on the Dow Jones Industrial Average this year, falling almost 18 percent. That's despite a nearly 15 percent rise in the Dow, which ticked closer to 20,000 Tuesday.

The industry leader in athletic apparel and footwear is facing a slew of pressures, including the rise of Under Armour (UAA). And as the popular athleisure style pivots from performance gear to retro fashion, German brand Adidas (ADS-DE) is also gaining share.

High inventory levels and The Sports Authority bankruptcy are likewise weighing on Nike's revenues and future orders. These orders refer to goods that have been requested by wholesale customers, but were not delivered during the quarter.

Future orders have traditionally been considered a gauge for future demand. But last quarter, Nike said it would no longer provide this figure in its earnings releases, as a shift in selling to the web and in its branded stores has made this metric less relevant. Instead, it will detail this information on a call with analysts to provide additional context. management said.

Future orders in North America grew at their worst rate in more than six years during the prior three-month period. North America represents roughly half of Nike's sales. 

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