Nike Inc. on Tuesday posted first-quarter results that beat Wall Street’s profit expectations by 7 cents despite a double-digit dip in sales.
For the three months ended Aug. 31, income rose 0.5 percent to $513 million, or $1.04 a diluted share, from $510.3 million, or $1.03, in the year-ago quarter. Sales fell 11.7 percent to $4.8 billion from $5.43 billion. The Wall Street consensus estimate among analysts was for EPS of 97 cents on sales of $4.9 billion, according to Yahoo Finance.
European sales decreases were sharper. In Western Europe, apparel sales decreased 20.7 percent to $392.6 million as footwear sales dropped 15.2 percent to $635.4 million. Sales in Central and Eastern Europe plummeted, with apparel falling 37.1 percent to $97.4 million and footwear down 31.8 percent to $158.9 million.
In Asia, sales of apparel in Greater China dropped 15.9 percent to $168.1 million as footwear’s decline was 16.7 percent to $218.4 million. In Japan, apparel sales were down 7.6 percent to $66.7 million, offset slightly by a 4.4 percent gain in footwear sales to $97.5 million. In emerging markets, apparel sales fell 8.8 percent to $107.2 million as footwear dropped 5.8 percent to $278.9 million.
Total Nike brand sales in apparel were down 16.4 percent to $1.28 billion as footwear sales lost 10.1 percent to $2.61 billion.
The company said worldwide futures orders for Nike brand athletic footwear and apparel, with delivery between September 2009 and January 2010, totaled $6.2 billion, 6 percent lower than orders for the year-ago period.
Mark Parker, president and chief executive officer, told Wall Street analysts on a conference call after the markets closed that in December, “We said Nike had the right mix of competitive advantages to manage through the tough times ahead. We talked about the unique strength of our brands, our business and our balance sheet. We told you that we would leverage those trends to create even more competitive separation [and the first-quarter results show] that we’re doing just that....
“On the capital side, we have the strongest balance sheet in the industry and it continues to be a significant competitive advantage that allows us to pursue appropriate growth opportunities,” he said. Cash and cash equivalents ended the quarter at $2.26 billion, up from $1.63 billion a year ago.
Parker added, “While our consumers remain cautious, Nike continues to connect through innovative products and compelling experiences in the marketplace.”
Charlie Denson, president of Nike brand, said the first-quarter results show the Nike brands are “stable and we are staying healthy. Our inventory levels are lean and well-managed and…have a strong innovation agenda. There is a lot of energy around sports and that continues with the fall season and we are in a good position to invest in growth opportunities both short- and long-term. We are performing better than ever around the things we control. The consumers remain cautious; so do retailers.”
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