Nike's Q1 sales up but net income declines by 22 percent

First Quarter revenues at Nike, Inc. increased 4 percent to 12.7 billion dollars compared to the prior year and were up 10 percent on a currency-neutral basis.

However, gross margin decreased 220 basis points to 44.3 percent, while net income was 1.5 billion dollars, down 22 percent and diluted earnings per share were 93 cents, decreasing 20 percent.

“Our strong start to FY23 highlights the depth and breadth of Nike’s global portfolio, as we continue to manage through volatility,” said John Donahoe, president and CEO, Nike, Inc.

Revenues at Nike and Converse brands increase in Q1

The company said in a release that revenues for the Nike brand were 12 billion dollars, up 4 percent on a reported basis and up 10 percent on a currency-neutral basis, led by double-digit currency-neutral growth in North America, EMEA and APLA, partially offset by declines in Greater China.

Revenues for Converse were 643 million dollars, up 2 percent on a reported basis and up 8 percent on a currency-neutral basis, led by double-digit growth in North America and Europe, partially offset by declines in Asia.

Nike’s sales growth was led by Nike direct growth of 14 percent. The company added that Nike brand digital business fueled growth, increasing by 23 percent, driven by double-digit growth in EMEA, North America and APLA, partially offset by declines in Greater China.

Wholesale revenues increased 1 percent on a reported basis and were up 8 percent on a currency-neutral basis.

Nike returns 1.5 billion dollars in Q1

In the first quarter, Nike returned approximately 1.5 billion to shareholders, including dividends of 480 million dollars, up 11 percent from the prior year.

Share repurchases of 1 billion dollars, reflected 9 million dollars retired shares. There were purchases of 0.7 billion dollars, reflecting 6.5 million shares retired under the company’s previous four-year, 15 billion dollars program approved in June 2018 and 0.3 billion dollars, reflecting 2.5 million shares subsequently retired under the company’s current four-year, 18 billion dollars program approved in June 2022.

The company said, under the 15 billion dollars program, which was terminated in August 2022, a total of 83.8 million shares for 9.4 billion dollars were repurchased.