Affected by the absence of a onetime tax benefit, Nike Inc. saw first-quarter net earnings slide 10 percent, but still handily beat Wall Street expectations.
This story first appeared in the September 25, 2008 issue of WWD. Subscribe Today.
For the three months ended Aug. 31, the active giant posted net earnings of $510.5 million, or $1.03 a diluted share, compared with $569.7 million, or $1.12, in the prior year. Sales climbed 17 percent to $5.4 billion from $4.7 billion.
The consensus estimate had been 92 cents a diluted share on revenues of $5.2 billion.
Excluding a onetime tax benefit of $105.4 million in last year’s first quarter, net income would have grown, not slid, 10 percent.
Futures orders climbed 10 percent, led by 27 percent increases in the Asia-Pacific and Americas regions. U.S. and European orders grew a more modest 3 percent and 4 percent, respectively. Inventory, however, also grew 14 percent to $2.5 billion at the end of the first quarter.
“We’re not stopping to celebrate, and we aren’t complacent,” Nike Inc. president and chief executive officer Mark Parker said in an after-hours earnings call Wednesday. “We’re just coming off a summer that created tremendous global excitement in sports, and we’re coming into a season of championships, which creates great opportunities going forward.”
The Beaverton, Ore.-based firm saw growth across all regions. Asia-Pacific led the growth with a 36 percent gain to $860.6 million in revenues, followed by 26 a percent gain in the Americas region to $355.7 million. Even the U.S. posted a respectable 8 percent increase to $1.8 billion — a positive sign after growth slowed in Nike’s biggest and most mature market in the last quarter.
As highlights, the company pointed to the fact that retail revenues were up 8 percent, and said its competitive running business was making strides. Nike also highlighted the impact of the Beijing Olympics not only on China’s market, where futures are up nearly 50 percent, but also worldwide.