Nike (NYSE:NKE) reported first-quarter earnings that surpassed Wall Street expectations on Wednesday, driven by solid performance in wholesale channels, pushing shares up more than 3% in premarket trading.
The company posted earnings of 49 cents per share for the quarter, beating analysts’ forecast of 27 cents.
Total revenue increased 1% to $11.7 billion, broadly in line with expectations. Wholesale sales grew 7% to $6.8 billion as retailers replenished inventories ahead of major sports launches, while Nike Direct, which includes company-owned stores and online sales, declined 4% due to weaker digital demand.
“F1Q results show strategies to improve product and balance distro are working,” Jefferies analyst Randal Konik said.
“CEO Hill is acting with urgency and creating a culture of winning again which should return Nike to sustainable growth and margin improvement ahead. With shares trading near a 15-yr low on price-to-sales (P/S), we would aggressively buy shares at current levels, so Just BUY It.”
HSBC analysts added that after “no sales growth for 18 months, Q1 ending August shows it is likely at the end of that tunnel.”
“Nike shares should thrive, despite tariffs and double-digit topline growth at rival Adidas,” they noted.
Revenue for the Nike brand rose 2%, fueled by North American sales, while Greater China experienced a decline. Converse revenue dropped 27%.
Gross margin contracted 320 basis points to 42.2%, impacted by higher discounts and tariffs, and net income fell 31% to $700 million.
“This quarter Nike drove progress through our Win Now actions in our priority areas of North America, Wholesale, and Running,” CEO Elliott Hill said.
Hill noted that recovery remains uneven across regions and product categories. CFO Matthew Friend added that external headwinds will continue to pressure results and emphasized that cost discipline remains a top priority.
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