Nike stock rises as profit beats estimates and inventories fall

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Nike stock rises as profit beats estimates and inventories fall
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Nike on Thursday reported a first-quarter profit that beat expectations, although sales came up just shy of expectations.

Nike Inc. on Thursday reported a fiscal first-quarter profit that beat expectations, although revenue came up just shy of Wall Street’s estimates, amid a drop in sales for Converse sneakers.The athletic-gear giant reported fiscal first-quarter net income of $1.45 billion, or 94 cents a share, compared with $1.47 billion, or 93 cents a share, in the same quarter last year. Revenue crept higher to $12.94 billion, compared with $12.69 billion in the prior-year quarter.

Analysts polled by FactSet expected Nike to report earnings per share of 76 cents, on revenue of $13 billion. Gross margin fell 10 basis points to 44.2%, weighed by higher product costs and a tougher foreign-exchange backdrop, and offset by “strategic pricing actions.” The company’s inventories fell 10%, as Wall Street seeks progress on efforts by businesses to narrow down their stockpiles of unsold goods.

Sales for Converse shoes were $588 million, down 9%, amid weaker demand in North America. Growth in Asia, however, acted as a counterweight to that decline. Nike reported earnings as stiff competition — from the likes of Adidas ADDYY, -0.51% and On Holding ONON, +0.27% — and weaker demand for sneakers and clothing keeps prices lower. While analysts say Nike stands to benefit from an enduring shift toward more casual gear, recent outlooks from sporting-goods chains like Foot Locker Inc. FL, +0.65% and Dick’s Sporting Goods Inc. DKS, +0.38% have been more downbeat.

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