NIKE has reported financial results for its fiscal first quarter ended 31 August 2017. For the quarter, NIKE reported… ‘sustained revenue growth in international geographies and NIKE Direct globally was offset by an expected decline in North America wholesale revenue.’
“This quarter, we captured near-term opportunities through our new Consumer Direct Offense,” said Mark Parker, Chairman, President and CEO of NIKE. “Looking ahead to the rest of fiscal 2018, we will ignite NIKE’s next horizon of global growth through the strength of our brand, the power of our innovative products and the most personal, digitally-connected experiences in our industry.”
Revenues for NIKE were US$9.1 billion, effectively flat on the previous year period on both a reported and currency-neutral basis.
As previously announced on 15 June 2017, a new company alignment was created as a result of the Consumer Direct Offense, which simplified NIKE Brand’s geography structure from six geographies to four – consisting of (1) North America; (2) Europe, Middle East & Africa (EMEA); (3) Greater China; and (4) Asia Pacific & Latin America (APLA). The financial results for the NIKE Brand are now reported based on these four operating segments.
Revenue for the NIKE Brand was US$8.6 billion, up 2% on a currency-neutral basis, driven by growth in Greater China, EMEA and APLA, including growth in sportswear. Revenues for Converse were US$483 million, down 16% on a currency-neutral basis, mainly due to declines in North America.
Diluted earnings per share for the quarter were US$0.57, down 22% due to a gross margin decline, a higher effective tax rate and higher other expenses. This was partially offset by lower selling and administrative expense and a lower average share count.
Gross margin declined 180 basis points to 43.7%, due primarily to unfavourable changes in foreign currency exchange rates and, to a lesser extent, a higher mix of off-price sales.
Selling and administrative expense decreased 1% to US$2.9 billion. Demand creation expense was US$855 million, down 18%, reflecting higher prior year investments in key sports events. Operating overhead expense increased 8% to US$2.0 billion, driven by realignment costs associated with a previously announced workforce reduction in June and continued investments in NIKE Direct.
Other expenses, net were US$18 million, primarily comprised of net foreign currency exchange losses.
During the first quarter, NIKE repurchased a total of 15.3 million shares for approximately US$849 million as part of the four-year, US$12 billion share buyback program approved by the Board of Directors in November 2015. As at 31 August 2017, a total of 95.0 million shares had been repurchased under this program for approximately US$5.3 billion.
