Nike Inc Smashes Earnings Estimates, Shares Hit New High

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Nike Inc Smashes Earnings Estimates, Shares Hit New High
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Nike Inc (NYSE:NKE) released its latest earnings report after closing bell tonight, posting diluted earnings of $1.09 per share on $7.98 billion in revenue. Analysts had been expecting earnings of only 88 cents per share on $7.84 billion in revenue.

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Breaking down Nike’s earnings report

In tonight’s report, Nike said its revenues rose 8%, and its worldwide futures orders climbed 11%. The company said strong demand for its Nike-branded products pushed revenue growth higher, but diluted earnings per share rose faster than revenue because the company expanded its gross margin. A lower tax rate and lower average share count also had a positive impact on diluted earnings per share.

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Nike brand revenues were $7.4 billion, a 15% increase not counting exchange rates. The company noted growth in all categories and geographies except Golf and Action Sports. Converse brand revenues rose 16% to $575 million. Market conversions in Asia and Europe drove the increase and also continued growth in the U.K. and the U.S.

The company reported a gross margin of 46.6%, an increase of 170 basis points. Nike said a shift toward higher margin products, as well as higher average prices and more growth in the higher margin DTC business drove the increase but were partially offset by higher costs for product imput.

Nike updates orders, inventories

Nike saw worldwide futures orders scheduled for delivery between September and January rise 11% year over year. The sportswear apparel maker saw 14% growth excluding currency changes. Nike saw a 14% increase in inventories as of the end of August.

The sportswear apparel maker reported a 12% increase in brand wholesale inventories. Changes in the average product cost per unit, plus changes from exchange rates, resulted in growth of 1 percentage point.

Nike also bought back 10.6 million shares in the first fiscal quarter of 2015. That’s part of the $8 billion share repurchase program the company’s board approved in September 2012. As of the end of the quarter, the company had bought back 62.5 million shares for $4.2 billion under the program. The average cost per share was around $67.74.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
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