Sportswear titan Nike (NKE) delivered a robust performance in its fiscal first quarter, outpacing Wall Street projections for sales, gross margins, and earnings per share. The company’s stock surged by more than 9% in response to the stellar results, maintaining its upward trajectory during the subsequent earnings call. Executives underscored the resilient consumer base amid concerns of a potential slowdown in Greater China.
According to Bloomberg consensus estimates, Nike’s fiscal first quarter results were as follows:
– Revenue: $12.94 billion, surpassing the estimated $12.99 billion and marking an improvement from the $12.69 billion reported in the same period the previous year.
– Adjusted earnings per share (EPS): $0.94, exceeding the estimated $0.75, and higher than the $0.93 from the corresponding period last year.
– Gross margin estimate: 44.2%, ahead of the estimated 43.7%, and consistent with the 44.3% reported in the same period the prior year.
The company’s inventories dwindled to $8.7 billion, a notable 10% drop from the previous year, surpassing analyst predictions of $8.84 billion. Meanwhile, direct-to-consumer sales, a pivotal growth metric for the footwear giant, ascended to $5.4 billion, registering a 6% surge from the same period a year ago.
Leading up to the report, analysts had tempered their outlook on Nike’s stock, citing a sluggish economic growth trajectory in the Chinese market compared to earlier projections. Despite this, revenue in Greater China stood at $1.74 billion, slightly below analysts’ forecasts of $1.83 billion in sales. Executives at Nike, however, assuaged investor concerns during the call. They emphasized that the sports industry is resurging in China, and John Donahoe, the CEO, expressed optimism about the consumer’s positive response to the company’s brands. This news was particularly heartening, especially considering the cautionary note sounded by retail partner Foot Locker (FL) in late June regarding a slowdown in its footwear business.
In a reassuring revelation, Nike pointed out that no single retail partner accounts for more than a “mid-single” digit portion of its overall sales. For the quarter, Nike reported wholesale revenues that held steady compared to the same period in the preceding year, defying expectations of a 4% decline.
In summation, the first quarter performance of Nike not only exceeded Street expectations but also demonstrated the resilience of its consumer base amid potential signs of softness in the Greater China market. The results underscore Nike’s capacity to navigate challenging economic landscapes and affirm its position as a stalwart in the sportswear industry.
Source: Yahoo Finance
