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Why Nike’s Sales Boost the Net Income in 1Q16

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Nike’s price movement

Nike (NKE) has a market cap of $98.19 billion. Nike’s YTD (year-to-date) price movement is rising day by day. After the 1Q16 earnings report, Nike fell by 0.55% to close at $114.79 per share. The price movement on a weekly, monthly, and YTD basis is -0.42%, 11.16%, and 20.36%, respectively. It’s trading at -0.23% on a trailing five-day basis.

Technically, it has broken the support of the 20-day and 50-day moving averages at times. Currently, it’s trading at 2.16% above the 20-day moving average, 1.90% above the 50-day moving average, and 12.18% above the 200-day moving average.

The SPDR Dow Jones Industrial Average ETF (DIA) invests 4.56% of its holdings in Nike. DIA tracks a price-weighted index of 30 large-cap US stocks selected by Wall Street Journal editors. DIA’s YTD price movement is -6.78%.

Nike’s competitors and their market caps are:

  • Under Armour (UA) – $22.04 billion
  • Crocs (CROX) – $1.10 billion
  • Ross Stores (ROST) – $19.95 billion
  • Skechers USA (SKX) – $7.12 billion
  • Dick’s Sporting Goods (DKS) – $5.86 billion
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Nike’s performance in 1Q16

According to the earnings report in 1Q16, the net revenue rose to $8,414 million—a rise of 8.16% on a quarterly basis. The revenue from footwear and apparel rose by 7.15% and 8.63%, respectively. By region the revenue from North America, western Europe, central and eastern Europe, and Greater China rose by 1.79%, 29.51%, 11.30%, and 6.80%, respectively, in 1Q16 on a quarterly basis. The net income and EPS (earnings per share) rose to $1,179 million and $1.34 per share—a rise of 36.30% and 36.73%.

The short-term investments and inventories rose by 4.34% and 1.77% in 1Q16. The debt-to-equity ratio fell to 0.61—a fall of 11.59% compared to the debt-to-equity ratio of 0.69 in 4Q15.

On August 27, 2015, the Nike Tech Pack Collection has reimagined classic Nike silhouettes using Nike Tech Fleece. According to the company, it’s a “pliable, lightweight layer of plush foam situated between soft cotton jersey that traps air to provide warmth, breathability, insulation, and articulation.”

About Nike

Nike is the world’s leading designer, marketer, and distributor of authentic athletic footwear, apparel, equipment, and accessories for a wide variety of sports and fitness activities. Nike’s brands include Converse and Hurley. Converse designs, distributes, and licences casual sneakers, apparel, and accessories. Hurley designs and distributes a line of action sports and youth lifestyle apparel and accessories.

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