Nike Releases Fiscal 2010 1Q Results

Oct 02, 2009 (Close-Up Media via COMTEX) -- NKEW | Quote | Chart | News | PowerRating -- Nike, Inc. has reported financial results for its fiscal 2010 first quarter ended August 31.

In a release on September 29, the Company noted that First quarter revenues decreased 12 percent to $4.8 billion, compared to $5.4 billion for the same period last year. Excluding changes in currency exchange rates, net revenue was down 7 percent compared to the same period last year. First quarter net income was flat compared to the prior year at $513 million and diluted earnings per share increased 1 percent to $1.04.

"We delivered a good start to the fiscal year," said Mark Parker, Nike, Inc. President and Chief Executive Officer. "These results illustrate that the emotion of sports, combined with innovative product, strong brands and premium retail experiences can make powerful connections to consumers even in challenging times."

Parker concluded, "Leveraging these powerful consumer connections with a laser focus on operational excellence will enable Nike to deliver consistent long-term profitable growth. We're on the right track, moving forward with confidence in hand and opportunity in mind."*

Futures Orders

The Company reported worldwide futures orders for Nike brand athletic footwear and apparel, scheduled for delivery from September 2009 through January 2010, totaling $6.2 billion, 6 percent lower than orders reported for the same period last year. Excluding currency changes, reported orders would have declined 4 percent.*

For the first quarter, Other business revenue, which includes Cole Haan, Converse Inc., Hurley International, Nike Golf, and Umbro decreased 5 percent to $604 million. Excluding currency changes revenue was down 3 percent. EBIT was flat to last year at $87 million.

Income Statement Review

In the first quarter of fiscal 2010 gross margins were 46.2 percent compared to 47.2 percent for the same period last year. Gross margins for the quarter were lower than the prior year primarily due to unfavorable exchange rates and product markdowns taken to manage inventories.

First quarter selling and administrative expenses were down 17 percent to $1.5 billion and dropped as a percent of revenue to 32.2 percent compared to 34.2 percent for the same period last year. Selling and administrative expenses for the quarter were lower than the same period last year due to lower demand creation spending and lower personnel costs following restructuring efforts completed last fiscal year. Demand creation expenses were higher last year due to expenses incurred to support the Olympic Games in Beijing and the European Championships.

The effective tax rate for the first quarter was 24.7 percent compared to 28.5 percent for the same period last year. The first quarter tax rate benefitted from our lower on-going tax rate on operations outside the United States.

Balance Sheet Review

At the end of the first quarter, global inventories stood at $2.3 billion, down 7 percent from August 31, 2008. Cash and short-term investments at period-end were $3.6 billion, 40 percent higher than $2.6 billion last year.

Share Repurchase

During the first quarter, the Company repurchased a total of 289,250 shares for approximately $15 million in conjunction with the Company's four-year, $3 billion share repurchase program, approved by the Board of Directors in June 2006. As of the end of the first quarter the Company has purchased a total of 49.5 million shares for approximately $2.7 billion under this program.

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