Nike Beats Street Estimates but Revenue Growth Is Flat

First-quarter earnings come in at 70 cents a share, 4 cents ahead of Wall Street expectations.
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Nike

(NKE) - Get Report

Thursday reported first-quarter earnings of $200 million, or 70 cents a diluted share, beating the Street's estimates by 4 cents. But revenue was flat with year-ago levels, reviving questions about the company's growth prospects.

Earnings at the Beaverton, Ore., footwear-and-apparel company, best known for inviting you to come fly with

Michael Jordan

, posted a 25% gain over last year's first-quarter EPS of 56 cents. But even as footwear revenue rose 4%, overall revenue for the quarter was flat with a year ago at $2.5 billion.

The sneaker giant, recognizing that Wall Street might focus on its growth prospects, assured investors in a press release that Nike would "continue leveraging a more efficient infrastructure as we turn back onto the path of revenue growth."

For the first quarter ended Aug. 31, earnings growth came from cost-cutting and share buybacks. Sales, general and administrative expense shrank 4%, and Nike bought back 2.7 million shares, shrinking the number of shares outstanding and therefore boosting per-share earnings. Interest expense dropped 30% to $10 million.

Revenue for T-shirts, sweatsuits and sports equipment dropped in the Americas and Asia, and European revenue growth got hosed by currency fluctuations.

After-hours traders reacted cautiously after the stock closed up 9/16 at 54 3/4 Thursday afternoon. The stock had slipped 5/16 to 54 7/16 late Thursday.

The first quarter is a bellwether for Nike. For starters, it includes the two-week back-to-school sales blitz, which comprises a fifth of the company's retail business. And the sneakers sold in August then become, of course, what all the other kids are wearing.