Boston, MA 09/26/2014 (wallstreetpr) – Footwear maker, Nike Inc (NYSE:NKE) disclosed that its gross margin recorded significant 1.7 percentage points improvements during the first quarter primarily on product mix of higher margin products. This apart, increased average prices and the continuous uptick in the high-margin DTC unit has allowed the company to report strong financial results for the first quarter. As a result, investors are shopping the stock aggressively to lift its prices possibly to a 52-week high on Friday if the pre-market trading was an indication.
Improved Gross Margin
The company said that its gross margin increased to 46.6% in the first quarter from 44.9% in the year earlier quarter, its statement revealed. However, it faced pressures from selling and administrative expenses as it represented 31.1% of revenue compared to 29.5% of revenue in the prior year quarter.
Nike Inc (NYSE:NKE) pointed out that demand creation costs witnessed 23% uptick to $897 million due to marketing investments during the World Cup. Similarly, its operating overhead costs advanced 19% to $1.6 billion on account of increased expenses towards DTC business expansion and investments in operational infrastructure.
1Q Results
The company reported 23% increase in its net income to $962 million from $779 million, and the earnings recorded 27% growth to $1.09 a share from 86 cents a share in the year-ago quarter. This was way ahead of the Wall Street analysts’ estimations of 88 cents a share.
Its top line witnessed 15% growth to $7.98 billion from $6.97 billion in the previous year quarter. Its NIKE Brand fetched revenue of $7.4 billion during the first quarter recording 15% uptick on a currency neutral basis driven by growth in each product type, geography except Action Sports and Golf.
Similarly, Nike Inc (NYSE:NKE) was able to generate 16% more revenue for Converse to $575 million fuelled by market conversions in Asia and Europe apart from its continued growth in its directly distribution in the U.S., as well as, United Kingdom.
Share Repurchase
The Nike Inc (NYSE:NKE) has bought back a total of 10.6 million shares for about $819 million during the third quarter. This takes the total number of shares repurchased to 62.5 million under its $4.2 billion share buyback program of 2012.
