Nike got walloped by the dollar

The US dollar just took a huge bite out of Nike's quarterly revenue.

On Thursday after the market close, Nike reported revenue of $7.5 billion for its fiscal third quarter ending February 28, up 7% from a year ago; Wall Street analysts had forecast revenue to come in at $7.6 billion.

Excluding currency adjustments, however, revenue would have increased 13%.

The reason revenue falls when the US dollar rallies is that any business Nike does overseas, say in Europe where it sells gear in euros, takes a hit when the company converts those sales to dollars. Over the last several months, the dollar has strengthened aggressively, rising about 25% since June of 2014.

In a note to clients on Thursday, analysts at HSBC argued that the dollar is due to see these gains cool off over the coming months.

On the earnings per share front, Nike topped expectations, reporting EPS of $0.89 against estimates for $0.84. In after hours trade on Thursday, shares of Nike were up less than 1%.

And while Nike certainly took a hit on the dollar in the first quarter, the impact looks set to be even bigger in upcoming periods.

Nike disclosed Thursday that futures orders were up 2% overall, but would have been up 11% excluding currency adjustments.

The biggest currency impacts as it relates to futures orders comes from Western Europe, where presumably most of the company's customers are buying in euros, where futures orders would have grown 7% excluding currency adjustments, but fell 14% as reported.

Over the last six or so months, the euro has lost about 25% of its value.

In Japan, futures orders were down 4% but would have increased 13% excluding currency impacts, while Central & Eastern European orders were down 1% as reported but would have increased 21% without currency impacts.

In China and North America, futures orders were up 22% and 15%, respectively, with negligible currency impacts.

Here's the full table from Nike.