Nike (NKE) reported fiscal first quarter results after the bell on Thursday that topped Wall Street’s estimates for gross margins and earnings per share while showing less of a slowdown than expected in the wholesale division of its business.
Here’s how Nike’s results stacked up against Wall Street analyst expectations, according to Bloomberg consensus estimates:
Revenue: $12.94 billion vs. $12.99 billion (est.) and $12.69 billion (same period year prior)
Adj. earnings per share (EPS): $0.94 vs. $0.75 (est.) and $0.93 (same period year prior)
Gross margin estimate: 44.2% vs. 43.7% (est.) and 44.3% (same period year prior)
Nike’s inventories fell in the quarter to $8.7 billion down 10% compared to the year prior. Analysts had anticipated inventories of $8.84 billion. The metric has been closely tracked since an inventory glut plagued the retailer throughout 2022. Meanwhile, direct-to-consumer sales, a closely watched growth metric for the shoe giant, increased to $5.4 billion, up 6% from the same period a year ago.
Nike’s stock had stumbled into the report. Shares are down 9% over the last month, and Wall Street analysts were warning of a subdued report from the athletic apparel behemoth.
Shares were up about 1% in after hours trading after the report.
Revenue in greater China had been a key concern for investors headed into the report. The Chinese economy has produced slower economic growth than expected this year. Wall Street analysts fear that could also weigh on companies like Nike, who have significant exposure to China.
In the most recent quarter, Nike saw revenue in Greater China at $1.74 billion. Analysts had expected the segment to show $1.83 billion in sales, according to Bloomberg consensus data.
“The China story is probably the biggest one here for Nike,” Forrester Research analyst Sucharita Kodali told Yahoo Finance Live on Tuesday. “The challenge is that Nike has been very dependent on the Asian market, certainly on the Chinese consumer. Not only do you have issues with the softening of the Chinese consumer and their spending ability but also just a lot of geopolitical risk that is there.”
Nike’s report also comes about a month after Foot Locker warned of a slowdown in its footwear business due to “price sensitive” consumers. About 64% of sales at Foot Locker (FL) are the Nike brand, according to Jefferies. If Foot Locker struggles to offload Nike inventory that could impact the shoe giant’s wholesale market, Wall Street analysts noted.
For the quarter, Nike reported wholesale revenues growth that came in flat compared to the same period a year prior. The Street had been expecting a decline of 4% from the same period a year prior.
Josh Schafer is a reporter for Yahoo Finance.
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