Nike (NKE) posted its Q1 2017 results on Tuesday after the closing bell. Shares for the athletic footwear giant slumped 3% in after-hours trading, as investors weren’t exactly moved by the results. Nike, on the other hand, is quite pleased with its performance.
Here are three takeaways from the results:
1. Revenue Was Up 8%
Revenue for the first quarter was up 8% year-over-year, climbing to $9.1 billion. Foreign currency exchange prevented growth from reaching 10%.
The figure beat Nike’s own guidance from three months ago.
The company saw 6% net income growth, reaching $1.25 billion. Net income rose 9% per diluted share, reaching $0.73.
Not accounting for currency exchange, revenue for the NIKE Brand was up 10% compared to the same period last year. The company saw strong growth in sportswear and its Jordan brand.
Revenue from the recently-acquired Converse brand was up 4% year over year. Strong sales in North America were slightly offset by declining sales in Asia-Pacific and Europe. The company is still in the midst of shifting the brand to a direct operating model. The Converse brand is expected to demonstrate steady growth in the future.
2. International Sales Growth Beat North American Growth
Nike saw 6% sales growth year-over-year in North America, bringing in $4.03 billion. International regions all achieved double-digit growth.
- Central and Eastern Europe: Up 16% to $440 million
- Western Europe: Up 10% to $1.76 billion
- China: Up 21% to $1.02 billion
- Japan: Up 18% to $245 million
- Emerging Markets: Up 11% to $945 million
While sales growth wasn’t as impressive in North America, it marks an improvement over the last quarter when growth was flat.
3. Gross Margin Was Down
Nike’s gross margin was down 200 basis points compared to last year, to 45.5%. Higher sale prices were offset by temporary headwinds.
Nike warned that gross margin would contract in Q1, as the company was still clearing out excess inventory.
