Jun 20, 2017 | By Carlene Thomas Bailey
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US sports giant Nike posted a revenue and profit jump in Q1 that beat analysts’ expectations and sent its shares up in after-hours trading, as the company benefited from strong demand and an expansion in its gross margin. Revenues at the company grew by 15% in Q1 to hit $7.98bn, with those at its core Nike brand also rising 15% to reach $7.4bn as it saw growth in every product type, geography and key category except Action Sports and Golf. Converse revenues grew 16% to $575m, currency neutral.
On a constant currency basis, footwear sales grew 18%, apparel sales rose 11% and equipment sales lifted 5%, while regionally revenues were up by 12% in North America, 25% in Western Europe, 9% in Central and Eastern Europe, 20% in Greater China, 4% in Japan and 10% in Emerging Markets.
And those strong revenue gains helped propel net profit up 23% to $962m, with diluted earnings per share surging 27% to $1.09 in reflection of a 3% decline in its outstanding shares. Gross margin also increased by 170 basis points to 46.6%, mainly due to a shift in the product mix to higher margin products, higher average prices and growth in the higher margin direct-to-consumer business.
The strong results easily beat analysts’ expectations, with a Thomson Reuters poll forecasting revenue of $7.84bn and EPS of $0.88, and Nike shares rose 7.34% in after-hours trading.
“Fiscal year 2015 is off to a strong start. Our connection to consumers and ability to innovate, combined with our powerful global portfolio, is a complete offense,” said CEO Mark Parker. “Nike has never been better positioned to realise our tremendous growth potential.”
That confidence is reflected in Nike’s future orders which, for the Nike brand’s apparel and footwear scheduled for delivery from the end of this month to January 2015, are up 11% – or 14% currency neutral – compared to orders received for the same period last year.
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