Nike Inc (NYSE: NKE) has reported the adjusted earnings per share of 57 cents in the first quarter of FY 18. The market was expecting 34 percent decline from a year ago in earnings per share but actually, there was a decline of 22 percent. But, the company had reported the adjusted revenue of $9.1 billion in the first quarter of FY 18, as there was lack of sales growth due to the major decrease in demand and sales of basketball shoes both at Nike and in the larger industry and a challenging retail environment in the U.S. As a result, NKE’s stock price fell 4.5% this morning (As of 9:37AM EDT; Source: Google finance).
Revenues for the NIKE Brand were $8.6 billion, which grew 2 percent on a currency-neutral basis due to the growth in Greater China, EMEA and APLA, including growth in Sportswear. The revenues for Converse were $483 million, which is down 16 percent on a currency-neutral basis, mainly due to the declines in North America.
The major U.S. retailers falling over the past 18 months, NKE has been trying to generate more revenue through its own stores and websites. They are also pursuing new channels for distribution, including inking a deal this year to sell lower-end items through Amazon.com Inc. Further, NKE is facing heavier competition from its traditional rivals, as well as nonathletic brands pushing into workout clothing. To combat the situation, NKE has cut down 2 percent of its global workforce this year, or about 1,400 jobs, with half the cuts coming at its headquarters.
NKE expects the sales to decline in the first half of the fiscal year. The company’s focus will be selling more goods directly to consumers, especially as the U.S. retail market suffers.
During the first quarter, NKE has repurchased a total of 15.3 million shares for approximately $849 million as part of the four-year, $12 billion program approved by the Board of Directors in November 2015. As of August 31st, 2017, a total of 95.0 million shares had been repurchased under this program for approximately $5.3 billion.
NKE stock has fallen 8.2% in the last six months (source: Google Finance).