Athletic apparel, footwear and accessories retailer, NIKE Inc. (NKE – Analyst Report) started fiscal 2016 on a high note as the company continues to woo its customers with innovative products in the first quarter. Fueled by the sturdy quarterly performance and growth in global future orders, the company’s shares rose 8.3% in yesterday’s after-hours trading session.

The company’s first-quarter earnings per share of $1.34 surged nearly 23% year over year and surpassed the Zacks Consensus Estimate of $1.19. The bottom-line growth was driven by an impressive top line, gross margin improvement, lower tax rate, reduced share count and selling, general and administrative (SG&A) expenses leverage.

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Delving Deeper

Net sales of this sportswear retailer advanced 5.4% to $8,414 million in the quarter and beat the Zacks Consensus Estimate of $8,215.9 million. On a currency neutral basis, sales rose 14%.

Revenues of the company’s NIKE Brand increased 15% on a currency neutral basis to $7.9 billion. The segment registered growth across all regions and in about every major product categories.

Moreover, NIKE Brand’s Direct-to-Consumer (DTC) revenues ascended 21% in the quarter, backed by significantly higher nike.com revenues, comparable-store sales growth and addition of new stores.

Further, revenues at the company’s Converse brand rose 3% to $555 million on a currency neutral basis. The improvement was driven by strong growth in the U.S., partly offset by a fall in certain European countries, primarily the UK.

Nike’s global future orders, slated for delivery from Sep 2015 through Jan 2016, climbed 9% year over year. On a currency neutral basis, future orders increased 17%, reflecting rising demand for the company’s products.

Gross profit improved about 7.4% to $3,995 million with gross margin increasing 90 basis points (bps) to 47.5%. The rise in gross margin was aided by increased average selling prices and persistent growth in higher margin DTC business, partly offset by greater product input and warehousing expenses.

SG&A expenses escalated about 4% to $2,577 million on account of higher operating overhead costs, offset by decline in demand creation expenses.

Demand creation expense declined 7.2% as costs related to the Soccer World Cup last year were absent this year. On the other hand, operating overhead costs increased 10.2% on account of persistent expansion of DTC business and investments made toward enhancing digital capacities and operational infrastructure.

Balance Sheet

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