NEW YORK — Robust apparel sales and greater efficiency helped propel Nike Inc. to strong bottom-line gains in the first quarter.
For the three months ended Aug. 31, the Beaverton, Ore.-based footwear and apparel titan reported net earnings of $261.2 million, or 98 cents a diluted share, which easily eclipsed the Wall Street forecast by 10 cents. By comparison, last year Nike recorded a net loss of $48.9 million, or 99 cents. Excluding an accounting change in the prior-year period, Nike’s profits would have increased 20.3 percent from $217.2 million, or 81 cents.
Total revenues grew 8.2 percent to $3.02 billion from $2.8 billion a year ago with global apparel sales chipping in an 8.3 percent improvement to $841.1 million from $776.9 million last year. As such, apparel sales accounted for 27.8 percent of Nike’s net revenue.
“Results reflect another great quarter in which global brand strength and superior product, combined with a favorable currency exchange environment, drove worldwide business,” said chief executive officer Phil Knight in a statement. “Sales topped $3 billion, the highest single-quarter revenue in our history. Equally important, we again demonstrated our commitment to managing our business for long-term profitability, achieving the highest gross margin percentage in our recent history.”
Greater efficiency was made evident by a 160 basis-point expansion in gross margin to 43 percent of sales from 41.4 percent a year ago, while selling, general and administrative costs retreated 10 basis points to 28.7 percent of sales.
Commenting on the gross margin increase in a research note to investors, Goldman Sachs analyst Margaret Mager wrote: “Gross margin should continue to improve as Nike derives benefits from its supply chain management projects such as leveraging distribution overhead, lower product costs and consolidated purchasing of materials. Currency is also contributing to stronger gross margin.”
In other bullish news, worldwide future orders scheduled for delivery from September through January rose 10.5 percent to $3.7 billion from the corresponding period a year ago.
By geographic region, sales gains overseas offset declines in the U.S., where only apparel produced a revenue increase. While domestic apparel sales climbed 5 percent to $346.5 million, or 27.6 percent of net U.S. revenues, footwear declined 5 percent to $822.4 million and equipment fell 4 percent to $85 million. Overall, U.S. revenues regressed 2 percent to $1.25 billion from $1.28 billion a year ago.
However, that was more than offset by growth in Nike’s second-largest region — comprising Europe, the Middle East and Africa — where net sales soared 17 percent to $1.01 billion from $869.3 million last year. Of that, apparel gained 10 percent to $341.9 million, which represented more than a third, or 33.7 percent, of total sales in the region.
In the Asia Pacific sector, apparel outperformed all other categories with a 15 percent improvement to $113.3 million, accounting for 32.5 percent of total revenues of $348.3 million. In the Americas excluding the U.S., apparel increased 2 percent to $39.4 million, which was more than a quarter, or 25.6 percent, of $153.7 million in total sales.
Nike released its earnings report after the markets closed Thursday, but earlier in the day, investors traded up the firm’s shares 13 cents, or 0.2 percent, to close at $57.25 on the New York Stock Exchange. In after-hours trading, they hit a new 52-week high of $60. The 52-week low is $38.53, reached on Oct. 10.