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For the reported period, revenues for the Nike Brand were $9.4 billion, up 10 per cent on a currency-neutral basis driven by double-digit growth internationally and in Nike Direct, strong momentum in North America, and growth in almost every category led by sportswear. Revenues for Converse were $527 million, up 7 per cent on a currency-neutral basis, mainly driven by growth in Europe and Asia.
"Nike’s Consumer Direct Offense, combined with our deep line up of innovation, is driving strong momentum and balanced growth across our entire business," said Mark Parker, chairman, president and CEO, Nike, Inc. "Our expanded digital capabilities are accelerating our complete portfolio and creating value across all dimensions as we connect with and serve consumers."
Gross margin increased 50 basis points to 44.2 per cent in the first quarter primarily due to higher average selling prices, favorable full-price sales mix and margin expansion in Nike Direct, partially offset by higher product costs.
Selling and administrative expense increased 7 per cent to $3.1 billion. Demand creation expense was $964 million, up 13 per cent primarily driven by sports marketing investments, brand campaigns and key sports moments. Operating overhead expense increased 5 per cent to $2.1 billion driven by investments in capabilities to drive the Consumer Direct Offense, particularly in Nike Direct and global operations.
Net income increased 15 per cent to $1.1 billion driven primarily by strong revenue growth, gross margin expansion and selling and administrative expense leverage while diluted earnings per share increased 18 per cent from the prior year to $0.67 reflecting a 2.5 per cent decline in the weighted average diluted common shares outstanding.
Inventories for Nike were $5.2 billion, flat to prior year, primarily driven by a clean marketplace with healthy inventories across all geographies due to strong full-price sell through on new innovation. Cash and equivalents and short-term investments were $4.3 billion, $1.3 billion lower than last year as share repurchases, dividends and investments in infrastructure more than offset net income and proceeds from employee exercises of stock options.
During the first quarter, Nike repurchased a total of 17.8 million shares for approximately $1.4 billion as part of the four-year, $12 billion program approved by the board of directors in November 2015.
"We are delivering stronger global growth and profitability than we anticipated entering this fiscal year," said Andy Campion, executive vice president and chief financial officer, Nike, Inc. "While foreign exchange volatility has increased, our underlying currency-neutral momentum continues to build as we transform how Nike operates, drives growth and creates value for our shareholders." (RR)
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