NIKE has reported financial results for its first fiscal quarter ended 31 August 2015. In the period, NIKE saw revenue growth of 5%. Meanwhile, ‘diluted earnings per share increased 23% due to broad-based revenue growth, gross margin expansion, selling and administrative expense leverage, a lower effective tax rate and a lower average share count.’
“Fiscal 2016 is off to a great start,” said Mark Parker, President and CEO of NIKE. “Our relentless pace of growth is driven by our proven strategy of putting the consumer first, obsessing innovation in everything we do and leveraging our powerful portfolio. We’re well-positioned to continue to deliver long-term growth that is both sustainable and profitable.”
- Revenues for NIKE increased 5% to US$8.4 billion, up 14% on a currency-neutral basis
- Revenues for the NIKE Brand were US$7.9 billion, up 15% on a currency-neutral basis driven by growth in every geography and nearly every key category.
- Revenues for Converse were US$555 million, up 3% on a currency-neutral basis, mainly driven by strong growth in the United States, partially offset by a decline in the UK.
- Gross margin expanded 90 basis points to 47.5%. The increase was primarily attributable to higher average selling prices and continued growth in NIKE’s higher margin Direct to Consumer (DTC) business, partially offset by higher product input and warehousing costs.
- Selling and administrative expense increased 4% to US$2.6 billion.
Other income, net was US$31 million, comprised primarily of net foreign currency exchange gains. For the quarter, the company estimates the year-over-year change in foreign currency-related gains and losses included in other income, net, combined with the impact of changes in exchange rates on the translation of foreign currency-denominated profits, decreased pre-tax income by approximately US$151 million.
Net income increased 23% to US$1.2 billion while diluted earnings per share increased 23% to US$1.34, reflecting strong revenue growth, gross margin expansion, selling and administrative expense leverage, a lower tax rate and a decrease in the weighted average diluted common shares outstanding.
Share repurchases
During the first quarter, NIKE repurchased a total of 5.5 million shares for approximately US$588 million as part of the four-year, US$8 billion buy-back program approved by the Board of Directors in September 2012. As of the end of the first quarter, a total of 86.4 million shares had been repurchased under this program for approximately US$6.5 billion, at an average cost of US$75.70 per share.
Futures orders
As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel scheduled for delivery from September 2015 through January 2016 were 9% higher than orders reported for the same period last year, and 17% higher on a currency-neutral basis.
