The Associated Press - BEAVERTON, Ore. (AP) — Nike Inc. says its fiscal first-quarter profit fell 24 percent because of a higher tax rate and unfavorable foreign exchange rates, but the results still beat Wall Street expectations. Investors initially cheered the results, but got skittish and sent the shares down 3 percent in extended trading.
The Beaverton, Oregon-based maker of athletic shoes and apparel said it earned $950 million, or 57 cents per share, in the quarter. That's down from $1.25 billion, or 73 cents per share, a year ago. Analysts surveyed by Zacks Investment Research expected earnings of 48 cents per share on $9.06 billion revenue.
Nike said its revenue was relatively flat at $9.07 billion. The company affirmed its previous outlook for mid-single-digit revenue growth over the year. Company officials said strong demand in global markets will offset the weakness it expects in the U.S. market as more shopping shifts online.
The company had announced in June along with its last quarterly results that it would sell some of its sneakers through e-commerce giant Amazon, part of a plan to make its swoosh-branded products available in more places online. Earlier that month, Nike said it would slash 1,400 jobs in a restructuring aimed at selling more shoes directly online. It already had deals with Amazon's rivals in China and Europe.
In addition to the Amazon deal, Nike also partnered with Instagram to make it easier for users to buy sneakers through the photo-sharing app.
But before the results were released, analysts at Canaccord Genuity expressed concern over what they saw as Nike's "stale innovation pipeline" and a "resurging Adidas." Analysts at the NPD Group said earlier this month that Adidas has surpassed Brand Jordan as the second most popular sneaker line in the U.S. Nike owns Brand Jordan. It did retain the top spot overall.
Nike shares had climbed almost 6 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed 12 percent. The shares dropped $1.71, or 3.2 percent, in extended trading.
The company said its tax rate in the quarter jumped to 11.4 percent from last year's 2.5 percent because of the way stock-based compensation is taxed.