Nike Inc. (NKE), a leading global sportswear and equipment supplier, yesterday reported fiscal second quarter net income of $375.4 million or 77 cents per share, compared to $391 million or 81 cents per share in the year-earlier quarter. Although earnings per share decreased 5% year over year, it exceeded the Zacks Consensus Estimate by 6 cents.
 
Total revenues decreased 4% during the quarter to $4.4 billion, compared to $4.6 billion in the year-ago period, primarily due to the continued economic downturn that led to a cut in consumer discretionary spending. Revenues fell across all the geographic regions, except the Emerging Markets, where revenue increased 8% year-over-year.
 
Selling and administrative expenses decreased 4% during the quarter due to lower marketing and personnel costs. Nike paid a tax rate of 23.5% during the quarter, compared to 24.9% in the year-earlier quarter.
 
Gross margin decreased marginally to 44.5%, compared to 44.7% in the year-ago quarter. The decrease in gross margin was primarily due to unfavorable exchange rates and product markdowns. Global inventories declined 10% year over year to $2.2 billion due to prudent inventory management policies. Cash and short-term investments totaled $4 billion at quarter end, 47% higher than $2.7 billion reported in the year-earlier quarter.
 
During the quarter, Nike repurchased over 3 million shares for approximately $194 million as part of its four-year $3 billion share repurchase program announced in 2006. By the end of the second quarter of fiscal 2010, the company had repurchased 52.5 million shares for approximately $2.9 billion under this program.
 
Nike reported an increase in future orders scheduled for delivery from December 2009 through April 2010, which improved 4% year over year to $7 billion. Future orders measure customer orders scheduled to be delivered in the coming season and is a widely used metric to gauge the performance of retailers.
 
Nike remained upbeat about its performance in the coming quarters with the World Cup Football round the corner. The company stressed that it was gradually gaining market share and was in a strong position to benefit when the global economy improved. The strong quarterly results further boosted Nike’s shares by approximately 2% to $64.50 in after-hours trading yesterday after closing at $63.25 on the New York Stock Exchange.
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