What Drove Nike’s Fiscal 2019 Second-Quarter Revenue

In the second quarter of fiscal 2019, Nike’s (NKE) revenue rose ~10% YoY (year-over-year) to $9.37 billion. It beat analysts’ consensus estimate, driven by Nike’s international and Nike Direct operations. Revenue increased rose 26% YoY in Greater China, 9% YoY in North America, 8% YoY in Europe, the Middle East, and Africa, and 2% in the Asia-Pacific region and Latin America.

Nike Digital revenue, of which the mobile channel comprises over half, rose 41% on a currency-neutral basis. Nike-brand footwear and apparel revenue rose 11% and 10%, respectively, while equipment revenue fell 1%. Converse sales rose 4% YoY.

Nike, focused on enhancing its digital operations, is confident that its digital penetration will increase to 30% by 2023 from its current 15%. In Nike’s second-quarter conference call, management stated that Chinese and other international markets could continue to grow as sports culture expands.

As we’ve discussed, Nike expects its fiscal 2019 revenue growth (on a currency-neutral basis) to be stronger than previously expected. In the third quarter, Nike expects currency-neutral revenue growth in the high-single-digit range. However, foreign exchange volatility could keep its real-dollar revenue growth under pressure.

In the fourth quarter of fiscal 2018, analysts expect Under Armour’s (UAA) revenue to rise by 1.2% YoY to $1.38 billion, driven by higher wholesale and international sales. They expect Skechers’s (SKX) revenue to grow 13.5% YoY to $1.10 billion, helped by its wholesale and retail business boosting its top line.