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Nike Q2 revenues rise but earnings drop 8 percent

By Prachi Singh

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Management

Nike has announced in a statement that revenue growth in the second quarter was driven by international geographies and continued strength in Nike Direct, partly offset by an expected decline in North America wholesale revenue. Diluted earnings per share were 0.46 dollar, down 8 percent compared to the same period last year, which the company attributed to a decline in gross margin and higher selling and administrative expense, which offset solid revenue growth, a lower tax rate and a lower average share count.

“This quarter, led by our Consumer Direct Offense, we accelerated international growth and built underlying momentum in our domestic business,” said Mark Parker, Chairman, President and CEO, Nike in a media release, adding, “For the back half of the fiscal year, Nike’s innovation line-up is as strong as it’s ever been and we’ll continue to actively shape retail through new differentiated experiences.”

Revenues for Nike Inc increased 5 percent to 8.6 billion dollars, up 3 percent on a currency-neutral basis. Revenues for the Nike brand were 8.1 billion dollars, up 4 percent on a constant-currency basis, driven by EMEA, Greater China and APLA, including growth in the sportswear and Nike basketball categories. Revenues for Converse were 408 million dollars, down 4 percent on a currency-neutral basis, as the company said, international growth was more than offset by declines in North America.

Gross margin for the quarter declined 120 basis points to 43 percent, as higher average selling prices were more than offset by unfavorable changes in foreign currency exchange rates and, to a lesser extent, higher product costs per unit. Net income decreased 9 percent to 767 million dollars as Nike added that a decline in gross margin and higher selling and administrative expense more than offset revenue growth and a lower tax rate, while diluted earnings per share decreased 8 percent from the prior year to 0.46 dollar, including a 2 percent decline in the weighted average diluted common shares outstanding.

Picture:Nike website

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