Nike Inc (NKE) Shares Surge on Strong Quarterly Earnings

Nike Inc (NKE) Shares Surge on Strong Quarterly Earnings

The shares of Nike are trading higher today after reporting impressive financial results for its fiscal first-quarter 2016. The stock price of the athletic footwear and apparel giant jumped more than 9% to $125.17 per share at the time of this writing, around 11:48 AM in New York.


Nike financial results

Nike delivered earnings of $1.34 per diluted earnings per share, an increase of 23% driven by a broad-based revenue growth, gross margin expansion, selling and administrative leverage and lower effective tax rate and share count.

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The athletic footwear and apparel giant said its revenue increased 5% to $8.4 billion due to growth. According to the company, its Converse brand achieved a 3% revenue growth to $555 million excluding currency changes during the quarter. The brand experienced strong growth in the United States.

The company’s revenue in China climbed 30% to $886 million and 12% to $179 million in Japan. Its revenue climbed 8% to $3.79 billion.

Nike said its gross margin climbed 90 basis points to 47.5% due to higher average selling prices and continued expansion in the higher margin Direct to Consumer (DTC) business.

During the quarter, the company’s selling and administrative expense increased 4% to $2.6 billion. Its demand creation declined 7% to $832 million while its operating overhead expense climbed 10% to $1.7 billion.

Nike’s effective tax rate was 18.4% compared with its 21.7% tax rate in the same period a year ago.

Nike is well-positioned ti deliver long-term growth

In a statement, Nike President and CEO Mark Parker said, “Fiscal 2016 is off to a great start. Our relentless pace of growth is driven by our proven strategy of putting the consumer first, obsessing innovation in everything we do and leveraging our powerful portfolio. We’re well-positioned to continue to deliver long-term growth that is both sustainable and profitable.”

Nike has $4.4 billion worth of inventories, up by 10%. Its cash and short-term investments were $5.4 billion as of August 31, 2015.

According to the company, its futures orders for the Nike brand athletic footwear and apparel scheduled for delivery from September to January 2016 were 9% higher than its futures orders in the same period last year.

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