Nike Beats Big On Earnings And Revenue, But The Stock Is Crashing

Despite an earnings beat on earnings and revenue, Nike Inc NKE stock fell more than 4 percent after Q1 results were released.

Revenues for the world's biggest athletic apparel company came in at $9.06 billion, a 7.7 percent year-over-year growth rate, easing concerns of an athleisure slowdown. The revenue beat totaled $190 million. Earnings beat by a whopping $0.17 per share, but it likely wasn't enough for investors.

Related Link: Nike In Trouble? Adidas Is Dominating Casual Athletic Space

Nike cited "strong revenue growth, operating overhead leverage, a lower effective tax rate and a lower average share count partially offset by a gross margin decline and higher demand creation expense in an Olympic quarter" as contributing to the earnings beat. Nike's effective tax rate for the quarter was just 2.5 percent.

What is alarming investors? It could be that Inventories as of August 31 were up 11 percent.

"Q1 also showed how we're amplifying every category through sports style innovation, transforming retail by connecting the digital and physical experience and ushering in a new Era of Personalized Performance," said CEO Mark Parker.

Key Geographies (Total Revenues on a currency neutral basis)

• North America - +6%
• Western Europe - +10
• Central & Eastern Europe - +10%
• Greater China - +21%
• Japan - +18%
• Emerging Markets - +11%

Total Nike Brand Figures

• Footwear - +10%
• Apparel – +12%
• Equipment – +6%

Nike has been the worst performing stock in the Dow this year, slightly edging Disney DIS. The negative investor reaction to Q1 earnings further cements Nike as the worst performing Dow component, and highlights the increased competition the company is seeing from Under Armour Inc UA and Adidas ADDYY, among others.