Nike'S First Quarter Performance Is Expected To Win

The sale of high priced, high margin products and unexpected strong growth in the Chinese market drove Nike Inc. Nike group, the world's largest sporting goods manufacturer, to achieve a super market expected profit in the first quarter of 2016 in the first quarter of fiscal year ninth, which has surged by 8.4% in the post trading session.

In the first quarter of August 31st, Nike Inc.

Group net profit increased 22.6% to $1 billion 179 million, or earnings per share of $1.34, higher than the market expectation of $1.19.

The group was described as the "amazing" third largest market with good performance. The EBIT profit of the Greater China region increased by 51% before interest tax.

The group's total revenue was 8 billion 414 million US dollars, which was also better than the market forecast of US $8 billion 220 million, an increase of 5.4% over the same period last year of 7 billion 982 million US dollars and an increase of 14% after excluding the exchange rate effect.

The Greater China region totally ignored regional economic growth and slowed down. By refurbishing stores, strengthening online sales and benefiting from the busy sports events during the current period, the revenue recorded a substantial increase of 30%, reaching US $886 million. It not only recovered from the predicament of high inventory after 2008 Olympic Games, but also entered the fast track of growth again.

Andy Campion Campion, chief financial officer of Nike group, Nike, said in a conference call after the earnings analysts revealed that its brand had never been strong in the macroeconomic turbulence in China, and its sales platform was healthier than ever before.

The futures orders delivered between September 2015 and January 2016, excluding the exchange rate effect, increased by 17% over the same period last year, far more than the comprehensive forecast of Consensus Metrix 10.3%.

The growth rate of Japan and Western Europe has reached 20+%, both exceeding the market expectations, especially the 27% increase in the Greater China region is 15.8% more than the market expectations.

Nike Inc. (NYSE:NKE), on Thursday, closed at $114.79, and investors watched the first quarter earnings after the first quarter, a 0.55% drop in the whole day, which rose 19% as of Thursday.

In addition to the largest market in North America, the group has achieved double-digit growth in all other markets except the exchange rate effect. Japan has taken the lead at 35% growth rate, and the central and Eastern European and emerging markets have increased by 24% and 19% respectively, while Western Europe has increased by 14%. However, the real exchange rate has been affected by a strong US dollar and a 14% drop.

The North American market increased by 9%.

By brand, Nike

Brand income, excluding exchange rate, rose 15% to 7 billion 898 million US dollars compared to the same period last year, and Converse CONVERSE rose 3% to 555 million dollars. After that, the real income was calculated to decline 3.5% as a result of the UK's slide.

Benefiting from the growth of income directly and the average price of products, the gross profit margin reached 47.5% in the first quarter, an increase of 90 basis points from 46.6% in the same period last year.

Key Private Bank analyst Rob Plaza pointed out that the efforts made by the Nike Inc. Nike group to reduce production and distribution costs are significant, and gross margin performance will help to further increase its share price.

Edward Jones analyst, Brian Yarbrough, also praised the group's impressive performance in the first quarter.

However, the group warned that the gross profit margin in the next two quarters will be affected by the higher inventory level in North America due to the backlog of the US west coast port strike cargo. The overall inventory increased by 10% over the same period last year.