Nike, Inc. reported earnings and sales that easily surpassed analyst expectations in the fiscal first quarter ended August 31, with Nike CEO citing “progress through our Win Now actions in our priority areas of North America, Wholesale, and Running.” Sales rose 1 percent, surpassing Nike’s guidance of a mid-single-digit decline.

Earnings came in at 49 cents per share, compared to the analysts’ consensus target of  27 cents per share.  Sales were $11.72 billion versus $11.0 billion expected.

First Quarter Income Statement Review

  • Revenues for Nike, Inc. were $11.7 billion, up 1 percent on a reported basis and down 1 percent on a currency-neutral basis.
    • Revenues for the Nike Brand were $11.4 billion, up 2 percent on a reported basis and flat on a currency-neutral basis, as currency-neutral growth in North America was offset by a decline in Greater China.
    • Nike Direct revenues were $4.5 billion, down 4 percent on a reported basis and down 5 percent on a currency-neutral basis, due to a 12 percent decrease in Nike Brand Digital and a 1 percent decrease in Nike-owned retail stores.
    • Wholesale revenues were $6.8 billion, up 7 percent on a reported basis and up 5 percent on a currency-neutral basis.
    • Revenues for Converse were $366 million, down 27 percent on a reported basis and down 28 percent on a currency-neutral basis, due to declines across all territories.
  • Gross margin decreased 320 basis points to 42.2 percent, primarily due to a lower average selling price, reflecting higher discounts and a channel mix shift, as well as higher tariffs in North America.
  • Selling and administrative expenses decreased 1 percent to $4.0 billion.
    • Demand creation expense was $1.2 billion, down 3 percent, primarily due to lower brand marketing expense reflecting higher investment in key sports events in the prior year, partially offset by higher sports marketing expense in the current year.
    • Operating overhead expense was $2.8 billion, unchanged from the prior year, primarily due to higher wage-related expenses, offset by lower other administrative costs.
  • Effective tax rate was 21.1 percent compared to 19.6 percent for the same period last year, primarily due to decreased benefits from stock-based compensation.
  • Net income was $0.7 billion, down 31 percent, and diluted earnings per share were 49 cents, a decrease of 30 percent year-over-year.

See below for more in-depth SGB Executive reporting on Nike’s fiscal first quarter results:

EXEC: Nike’s Sales Show Some Recovery; Tariffs Expected to Cost $1.5 Billion

 

Image courtesy Nike, Inc.