Nike, the famous sportswear brand, recently released its financial results for the first quarter. The good news is that Nike did even better than what experts expected in some key areas.
Earnings and Revenue: Nike earned $12.94 billion in revenue during the first quarter. Even though it was a bit less than what experts predicted ($12.99 billion), it’s still more than what they made during the same time last year ($12.69 billion).
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Earnings per Share: Nike’s earnings per share (EPS) reached $0.94, surpassing the $0.75 estimate. Last year, they earned $0.93 per share in the same period.
Gross Margin: The gross margin, which shows how much profit Nike makes after covering its production costs, was 44.2%. It’s better than the predicted 43.7% and almost the same as last year’s 44.3%.
Inventory and Direct-to-Consumer Sales: Nike’s inventory went down to $8.7 billion, which is 10% less than last year, beating the experts’ estimate. Their direct-to-consumer sales also increased to $5.4 billion, up 6% from last year.
These positive results came as a surprise to some, as Nike’s stock had dropped by 9% in the month leading up to this report. Analysts were worried that the report might not be so good.
One of the main concerns was about Nike’s business in China. China’s economy had been slowing down more than expected this year, and since Nike does a lot of business there, people were worried it might hurt the company.
In this quarter, Nike made $1.74 billion in China, which was less than what experts predicted ($1.83 billion).
However, Nike’s top executives assured everyone that things in China were looking good. The CEO, John Donahoe, mentioned that he had visited China recently and felt confident about Nike’s future there, despite the economic situation.
Another concern was the relationship with retail partners, like Foot Locker, who sell Nike products. If they couldn’t sell Nike’s products, it might hurt Nike’s business. But Nike clarified that no single retail partner made up more than a small part of their overall sales.
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In the end, Nike’s wholesale revenues stayed the same as last year, which was better than what experts thought would happen (a 4% decline).
So, in simple terms, Nike did well in the first quarter, even though some people were worried. Their sales and profits were good, especially considering the challenges in China and with retail partners. Nike seems to be in a strong position moving forward.
(Source: Yahoo Finance)
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