Nike books "flawless" first-quarter performance
- Q1 profit jumps 23% to $962m
- Revenues up 15% to $8bn
- Analyst describes performance as "flawless"
Nike's revenues grew 15% to $8bn in the first quarter
Sporting goods giant Nike delivered a "flawless" performance in the first quarter of its new fiscal year, with strong double-digit jumps in both profit and revenues.
Net income surged 23% to US$962m for the three months to 31 August, compared to $779m in the same period of the prior year.
Revenues grew 15% to $8bn from $6.97bn last year. Nike brand revenues were up 15% on a currency neutral basis to $7.4bn, with growth in every product type, geography and key category, except action sports and golf.
Its Converse brand, meanwhile, saw revenues rise 16% to $575m, driven by market conversions in Europe and Asia as well as continued growth in the direct distribution markets such as the US and UK.
Gross margin improved 170 basis points to 46.6% from 44.9% a year ago. The company attributed the increase to a shift in the product mix to higher margin products, higher average prices and continued growth in the higher-margin direct-to-consumer business, partially offset by higher product input costs.
"Fiscal year 2015 is off to a strong start," said president and CEO Mark Parker. "Our connection to consumers and ability to innovate, combined with our powerful global portfolio, is a complete offense. Nike has never been better positioned to realise our tremendous growth potential."
Worldwide futures orders for Nike brand athletic footwear and apparel were 11% higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 14%.
UBS analyst Michael Binetti described the group's performance as "flawless", while Kepler Cheuvreux analyst Jurgen Kolb said Nike surprised with its better-than-expected results, driven by its domestic business.
Kolb noted that the brand dominates its home market and achieved sales growth in North America of over 9% for the 16th consecutive quarter.
"Nike benefits from its dominance in the domestic basketball category and its ability to be very quick at the market with new product launches at premium prices," he added.
Click here for insight on Nike's long-term growth opportunities: IN THE MONEY: Innovation and e-commerce key to Nike's growth.
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