The company’s net income for the first quarter fell 24 percent to $950 million, or 57 cents a diluted share, from $1.25 billion, or 73 cents, a year earlier. Lower selling expenses were offset by gross margin declines.
Profits hit the high end of analysts’ estimates and outperformed the average, which called for EPS of 48 cents. In afterhours trading following the report, shares of the company slipped 3.2 percent to $52.
Nike’s sales for the three months ended Aug. 31 inched up to $9.07 billion from $9.06 billion.
Revenues for the Nike brand rose 2 percent in currency neutral terms, to $8.6 billion, with growth in Greater China, the Middle East and the Asia-Pacific and Latin America regions. Revenues from the Converse brand, on the other hand, sank 16 percent in constant currencies to $483 million driven by declines in North America.
Like other companies looking to become leaner and meaner, Nike is trying to put the decision makers closer to the customer so they can react to changes in preference and the marketplace more quickly.
It has also evolved its digital thinking and this summer, in an acknowledgment that more and more customers are shopping on Amazon whether brands like it or not, Nike launched a pilot with the e-commerce giant in hopes of presenting a more cogent image on the platform.
But the company’s broader push centers around the Consumer Direct Offense, which was laid out in June and has led to a 2 percent cut in its workforce.
On a conference call with analysts on Tuesday, Mark Parker, president, chief executive officer and chairman, underscored that the market was being reshaped by “the appetite for a constant flow of fresh and innovative products, the expectation of superior service, and the demand for retail delivery.”
To stay ahead of these shifts, Nike is realigning.
“While changing your approach is never easy, Nike has proven before that when we do, it’s always ignited the next phase of growth for our company,” Parker said. “We have had to make some tough choices with our teams. We’ve tested and learned and we got better.
“We are going deeper, we are connecting more personally to help each individual make the right choice for them,” he said. “That’s incredibly powerful for a brand that motivates people to do more. To make that vision a reality at scale, we are taking some bold steps. We are breaking old models and we are fully realigning our teams to be more personal by adding resources to our fastest-growing cities, editing our lines to create more choice on top-selling products, investing in better data and analytics to sense market shifts faster, activating new product creation teams focused only on speed-to-market, and we are leading with mobile.”