Nike revenue beats forecasts on North America, running progress

Nike Inc on Tuesday said sales beat expectations in the first quarter boosting hopes that the turnaround at the sports retailer is gathering momentum.

Nike said net income declined 31% to USD727 million in the three months to August from USD1.05 billion the year prior, or to USD0.49 per basic and diluted share from USSD0.70, beating USD0.28 consensus.

Revenue rose 1.1% to USD11.72 billion from USD11.59 billion a year ago, but fell 1% on a currency neutral basis, comfortably ahead of USD10.99 billion consensus.

Nike Direct revenue was USD4.5 billion, down 4%, or 5% on a currency-neutral basis. Wholesale revenue was USD6.8 billion, up 7%, or 5% on a currency-neutral basis.

Gross margin declined to 42.2% from 45.4%.

"While we're getting wins under our belt, we still have work ahead to get all sports, geographies, and channels on a similar path as we manage a dynamic operating environment," said Chief Executive Elliott Hill.

He said the quarter had seen progress through its 'Win Now' actions in priority areas of North America, Wholesale, and Running.

"I’m confident that we have the right focus in Win Now and that our new alignment in the Sport Offense will be the key to maximizing [Nike's] complete portfolio over the long-term," Elliott said.

Chief Financial Officer Matthew Friend said while he is "encouraged" by the momentum generated in the quarter, progress will "not be linear as dimensions of our business recover on different timelines."

"While we navigate several external headwinds, our teams are focused on executing against what we can control," he added.

Inventories were USD8.1 billion, down 2% year-on-year, reflecting a decrease in units, partially offset by increased product costs, primarily due to higher tariffs in North America.

Nike said it bought back USD123 million worth of shares in the quarter.