Despite negative chatter ahead of its first-quarter earnings release, Nike produced Q1 results after the market close today that handily topped sales and profit estimates.
The Beaverton, Ore.-based athletic firm said its net income in the quarter advanced 6 percent year-over-year, to $1.2 billion, or 73 cents per diluted share — a significant beat against expectations for diluted earnings per share of 56 cents.
Revenues gained 8 percent year-over-year, to $9.1 billion, which also topped forecasts for revenues of $8.9 billion.
While those numbers were better than expected, for Nike, growth in futures orders — a measure of overall retail demand and a gauge for future sales — is often seen as one of the more important variables. The company said worldwide futures orders were up 5 percent and 7 percent excluding currency changes — those results missed analysts’ forecasts for growth of 8 percent and also showed ongoing deceleration.
A longtime category leader, Nike has become a more controversial name for market watchers this year as increased competition from Adidas and Under Armour threatens demand for the brand — particularly in North American markets.
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Adding to concerns about slowing demand, Nike also reported double-digit growth in inventory this quarter, at 11 percent.
Nevertheless, Nike chairman, president and CEO Mark Parker maintained a bullish posturing on the brand’s Q1 performance and outlook.
“Fueled by an incredible summer of sport, Nike delivered strong global growth — and led the industry through disruptive innovation,” Parker said in a release. “Q1 also showed how we’re amplifying every category through sports style innovation, transforming retail by connecting the digital and physical experience and ushering in a new era of personalized performance — through product, consumer connections and our supply chain.”
Revenues for the Nike brand were $8.5 billion, up 10 percent on a currency-neutral basis driven by double-digit growth in Greater China, Western Europe, emerging markets, Central & Eastern Europe and Japan, including strong growth in sportswear, running and the Jordan brand.
Revenues for Converse were $574 million, up 4 percent on a currency-neutral basis, mainly driven by growth in North America, which was slightly offset by declines in Europe and Asia Pacific, according to the company.
On the heels of the release, Nike’s share slipped more than 4 percent in after-market trading.