• Nike posted first fiscal quarter earnings with a higher-than-expected EPS of 94 cents versus the anticipated 75 cents. However, the company’s revenue of $12.94bn fell slightly short of the $12.98bn forecast.
    China sales grew by 5%, but fell short of analyst expectations, while North America sales dipped by 2%.
  • Nike’s direct channel, including owned stores and digital, showed growth of 6%. Wholesale revenue remained flat at $7 billion as Nike seeks to balance its DTC strategy with its wholesale partnerships.
  • Inventory levels fell by 10% to $8.7bn, and consumer spending on apparel and footwear remains uncertain due to factors like inflation and student loan payments.
  • Net income for the quarter was $1.45bn, compared to $1.47bn in the same period the previous year. The Gross margin was stable, decreasing only 10 basis points to 44.2%, while expense increased 5% y/y.
  • The company maintained its full-year guidance for mid-single-digit revenue growth and gross margin expansion. The company also expects slight revenue growth and gross margin expansion in the second quarter.
  • Nike continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 21 consecutive years of increasing dividend payouts. In Q1 the company returned approximately $1.7bn to shareholders through dividends (+9% y/y) and stock buybacks of $1.1bn.
  • Nike’s stock has declined nearly 50% since its all-time high in November 2021. Over the past 35 years, the stock has experienced three other declines of over 50%. Remarkably, Nike has consistently outperformed the S&P 500 index, despite these significant fluctuations. This impressive track record can be attributed, in part, to the company’s sustained average return on invested capital, which has consistently hovered around 20% over this extended period. Given Nike’s outstanding track record and sheer brand equity, we are happy to add our position in the Cratos BCI Worldwide Flexible Fund and portfolios at current levels.

    By Lee Kern

Join our Mailing list!
Sign up to get all the latest financial news and business updates.

Subscribe to fund newsletter

Please fill in the form and we will get in touch with you shortly and help answer any questions you may have about Offshore Supporting services.