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Nike Q1 profit falls, sales grow
25 Sep '08
5 min read
Asia Pacific
In the first quarter, revenues in the Asia Pacific region grew 36 percent to $860.6 million compared to $633.7 million a year ago. Changes in currency exchange rates increased revenue growth by 10 percentage points. Footwear revenues were up 37 percent to $454.0 million, apparel revenues increased 38 percent to $332.7 million and equipment revenues grew 21 percent to $73.9 million. Pre-tax income increased 15 percent to $185.5 million.
Americas
Revenues in the Americas region increased 26 percent to $355.7 million, an improvement from $282.0 million for the same period last year. Currency exchange rates contributed 7 percentage points to this growth rate. Footwear revenues were up 24 percent to $245.8 million, apparel revenues increased 36 percent to $79.4 million and equipment revenues grew 21 percent to $30.5 million. Pre-tax income was up 18 percent to $69.1 million.
Other Businesses
For the first quarter, Other business revenues, which include Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd, which was acquired in the fourth quarter of last year, grew 7 percent to $655.3 million from $612.8 million last year and pre-tax income decreased 9 percent to $86.3 million.
Current year amounts are not directly comparable to the prior year due to changes in the Company's affiliate brands portfolio. In the first quarter of last year the Company's Other business segment included Converse Inc., NIKE Golf, Cole Haan, Hurley International LLC, the Starter Brand and NIKE Bauer Hockey.
Following a corporate strategic review the Starter Brand and NIKE Bauer Hockey were sold in the third and fourth quarter of fiscal 2008, respectively. First quarter revenues and pretax income for the continuing Other businesses (Converse Inc., NIKE Golf, Cole Haan and Hurley International LLC) grew 20% and 19%, respectively.
Income Statement Review
In the first quarter of fiscal 2009 gross margins were 47.2 percent compared to 44.8 percent for the same period last year. The increase in gross margin versus the prior year quarter reflects an improved product, regional and owned retail mix; price increases in the Company's U.S. and EMEA regions; favorable hedge results; sourcing cost initiatives; and higher margins in our Other businesses, partially offset by higher input costs and lower apparel margins in the U.S.
As anticipated, selling and administrative expenses were 34.2 percent of first quarter revenue compared to 30.8 percent for the same period last year due to demand creation spend in support of the European Championships and the Olympic games in Beijing.
The effective tax rate for the first quarter was 28.5 percent compared to 15.0 percent for the same period last year. The prior year tax rate was significantly lower due to the one-time utilization of past foreign losses, which contributed $0.20 per diluted share to last year's results.
Balance Sheet Review
At quarter end, global inventories stood at $2.5 billion, an increase of 14 percent from August 31, 2007. Cash and short-term investments were $2.6 billion at the end of the quarter, compared to $2.8 billion at the end of the first quarter last year.
In the first quarter, revenues in the Asia Pacific region grew 36 percent to $860.6 million compared to $633.7 million a year ago. Changes in currency exchange rates increased revenue growth by 10 percentage points. Footwear revenues were up 37 percent to $454.0 million, apparel revenues increased 38 percent to $332.7 million and equipment revenues grew 21 percent to $73.9 million. Pre-tax income increased 15 percent to $185.5 million.
Americas
Revenues in the Americas region increased 26 percent to $355.7 million, an improvement from $282.0 million for the same period last year. Currency exchange rates contributed 7 percentage points to this growth rate. Footwear revenues were up 24 percent to $245.8 million, apparel revenues increased 36 percent to $79.4 million and equipment revenues grew 21 percent to $30.5 million. Pre-tax income was up 18 percent to $69.1 million.
Other Businesses
For the first quarter, Other business revenues, which include Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd, which was acquired in the fourth quarter of last year, grew 7 percent to $655.3 million from $612.8 million last year and pre-tax income decreased 9 percent to $86.3 million.
Current year amounts are not directly comparable to the prior year due to changes in the Company's affiliate brands portfolio. In the first quarter of last year the Company's Other business segment included Converse Inc., NIKE Golf, Cole Haan, Hurley International LLC, the Starter Brand and NIKE Bauer Hockey.
Following a corporate strategic review the Starter Brand and NIKE Bauer Hockey were sold in the third and fourth quarter of fiscal 2008, respectively. First quarter revenues and pretax income for the continuing Other businesses (Converse Inc., NIKE Golf, Cole Haan and Hurley International LLC) grew 20% and 19%, respectively.
Income Statement Review
In the first quarter of fiscal 2009 gross margins were 47.2 percent compared to 44.8 percent for the same period last year. The increase in gross margin versus the prior year quarter reflects an improved product, regional and owned retail mix; price increases in the Company's U.S. and EMEA regions; favorable hedge results; sourcing cost initiatives; and higher margins in our Other businesses, partially offset by higher input costs and lower apparel margins in the U.S.
As anticipated, selling and administrative expenses were 34.2 percent of first quarter revenue compared to 30.8 percent for the same period last year due to demand creation spend in support of the European Championships and the Olympic games in Beijing.
The effective tax rate for the first quarter was 28.5 percent compared to 15.0 percent for the same period last year. The prior year tax rate was significantly lower due to the one-time utilization of past foreign losses, which contributed $0.20 per diluted share to last year's results.
Balance Sheet Review
At quarter end, global inventories stood at $2.5 billion, an increase of 14 percent from August 31, 2007. Cash and short-term investments were $2.6 billion at the end of the quarter, compared to $2.8 billion at the end of the first quarter last year.
NIKE Inc
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