Nike Reports 12% Revenue Drop For Q1 '10, Income Flat At $513M

Nike yesterday reported Q1 revenues for FY '10 decreased 12% to $4.8B, down from $5.4B for the same period last year. Excluding changes in currency, net revenue was down 7% from the year-ago period, while net income was flat compared to last year at $513M. Diluted earnings per share increased 1% to $1.04. Meanwhile, revenues in North America for Q1, which ended August 31, dropped 5% from the year-ago period to $1.8B. Footwear revenues in North America fell 4% to $1.2B, apparel revenues decreased 9% to $444M and equipment revenues dropped 5% to $98M. Nike's North America earnings before interest and taxes climbed 10% to $411M due to lower selling and administrative expenses and improved gross margins. In Western Europe, revenues for Q1 fell 18% to $1.1B, while revenues for Central and Eastern Europe dropped 33% to $286M. Revenue for Greater China fell to $416M, down 16% from $496M last year (Nike).

Denson Says Nike Is Stable, Staying Healthy

CHECK MARKS: In Portland, Brent Hunsberger writes Nike "appears to be following the upward trajectory of its logo," as the Q1 profits "held steady, thanks to savings from job cuts and a smaller marketing budget." The diluted earnings per share of $1.04 "beat analysts' consensus earnings estimates" of $0.97 a share. Nike execs said that the key to success in the quarter was a 17% drop "in sales and management costs." And despite "sales declines in nearly all regions," Nike "continued to take market share from competitors." Meanwhile, Nike's online sales and its Converse and Hurley brands "both recorded double-digit sales growth, offsetting continued weaknesses in apparel" (Portland OREGONIAN, 9/30). Virtus Investment Partners Chief Alternatives Strategist Joe Terranova said, "Nike just does not miss. In the last five years, they have missed maybe two, three, four times at most. This is a good story going forward for the market." optionMONSTER.com co-Founder Pete Najarian: "These earnings were pretty nice" ("Fast Money," CNBC, 9/29). Nike Brand President Charlie Denson said, "We are stable and we are staying healthy. Our inventory levels are lean and well managed." Nike shares climbed 4.3% to $62.68 in after-hours trading yesterday, after rising 1.9% to $60.09 in 4:00pm composite trading on the NYSE (WALL STREET JOURNAL, 9/30). CNBC's Matt Nesto said Nike stock has been doing “pretty well, up 16% so far this quarter” ("Closing Bell," CNBC, 9/29). At presstime, Nike shares are trading at $64.77, up 7.9% from its opening at $60.01 (THE DAILY).