Nike shares got a lift on Thursday afternoon after the athletic company beat earnings expectations for the first quarter in fiscal year 2024.
The athletic giant reported Q1 revenues of $12.9 billion, up 2 percent compared to the prior year. This was in line with Nike’s previously issued guidance for Q1, which projected revenues between flat to up in the low single digits. It also was essentially in line with FactSet estimates, which expected sales of $13 billion. Nike’s net income was down 1 percent to $1.5 billion, with diluted earnings per share of 94 cents, which was up 1 percent year-over-year. This blew past FactSet estimates, which expected EPS of 76 cents for Q1.
Nike shares were up more than 1 percent shortly after markets closed on Thursday.
“Q1 offered proof of what Nike can deliver when we connect great innovation, great storytelling and great marketplace experiences to consumers,” said Nike president and CEO John Donahoe in a statement. “Moving forward, we are laser-focused on scaling these successes with greater consistency and speed as we continue to integrate and streamline our business. This is how we’ll extend our leadership position and drive growth over the long-term.”
By channel, Nike direct revenues were up 6 percent to $5.4 billion, with growth seen across all geographies. Wholesale revenues were flat at $7 billion on a reported basis.
Amid a retail industry in flux, market watchers were looking for Nike’s recovery progress in the two crucial regions of North America and China.
Nike brand revenues grew 3 percent to $12.4 billion, driven by growth in EMEA, Greater China and APLA. Meanwhile, Nike brand revenues declined in North America in Q1. Converse revenues declined 9 percent to $588 million, in part due to a decline in North America sales.
Q1 inventories were down 10 percent year-over-year to $8.7 billion.
Nike’s gross margin took a hit in Q1 by 10 basis points due to higher product costs and foreign currency exchange headwinds, which was partially offset by “strategic pricing actions,” Nike said.
Nike EVP and CFO Matthew Friend said in a statement that Nike’s results showed the “impact of staying on the offense over the past fiscal year.”
He added, “With a healthy marketplace and another quarter of brand and business momentum, we are strengthening our foundation for sustainable, profitable, long-term growth.”
In June, Nike said it expects fiscal year 2024 revenues to grow in the mid-single digits, accounting for headwinds from wholesale shipping timing from the prior year. Nike did not immediately reaffirm or revise its outlook.