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Nike posts Q1 profit jump on higher revenue


By Hannah Abdulla | 25 September 2019


US sportswear retailer Nike Inc has reported a 25% jump in first-quarter profits to US$1.4bn driven by strong revenue growth.

For the quarter ending 31 August, revenues grew 7% to US$10.7bn on a reported basis and 10% on a currency-neutral basis driven by growth in all geographies.

North America sales rose 4% to $4.3bn year-on-year and were up 12% to $2.8bn in EMEA. In Greater China, sales jumped 27% to $1.7bn, while in Asia Pacific and Latin America, sales were 13% higher at $1.2bn.

At brand level, revenues for the company's namesake label totalled $10.1bn, up 10% on a currency-neutral basis driven by growth across Nike Direct and wholesale, key categories including sportswear and the Jordan Brand, and continued growth across footwear and apparel.

Revenues for Converse, meanwhile, were $555m, up 8% on a currency-neutral basis, mainly driven by double-digit growth in Asia and through digital globally, which was partially offset by declines in the US.

Andy Campion, executive vice president and CFO, said the company's "targeted strategic investments are accelerating Nike's digital transformation and extending its competitive advantage."

Last month Nike acquired predictive analytics platform Celect in a move that will help it to anticipate consumer needs and optimise inventory across multiple channels.

While earlier this year, the company spent US$184m on a new Nike Air Manufacturing Innovation (Air MI) facility in Goodyear, Arizona, expanding its US footprint.

"Even amidst the increasingly volatile macroeconomic and geopolitical environment, we expect our unrelenting focus on better serving the consumer to continue fueling strong, broad-based growth across our global portfolio," Campion added.

Meanwhile, speaking to analysts on its first-quarter earnings call, CEO Mark Parker said Nike expects the effect of the ongoing trade spat between the US and China to hit its results between the second and fourth quarters.

Parker said Nike is a "big proponent of free and fair trade and that's because tariffs have always been part of the financial equation in Nike."

"So with a little bit of time we have a lot of levers we can work with from sourcing to other levers."

Commenting on the results, John Kernan at Cowen Equity Research said: "Transformational growth and investments are extending Nike's competitive advantage, particularly with its acquisition of retail predictive analytics and demand sensing company Celect in Q1. NKE's technology investments and acquisitions in the data science field will support Nike's ability to read and react to digital demand signals and increase full-price selling. We note that the acquisition of Celect and investments could render SG&A leverage more difficult in 2H:20."



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