Image source: The Motley Fool.

Nike (NKE -0.91%) released fiscal first-quarter 2017 results Tuesday after the market close. With shares of the athletic apparel and footwear giant down around 3% in after-hours trading as of this writing, it doesn't seem investors are particularly thrilled.

But that doesn't mean Nike isn't pleased with where it stands. Let's take a closer look at how Nike kicked off its latest fiscal year. 

Nike's headline numbers

Quarterly revenue increased 8% year over year, to $9.1 billion, and would have risen 10% had it not been for the stubborn negative influence of foreign currency exchange.

That's slightly better than Nike's guidance provided three months ago. During last quarter's earnings conference call, CFO Andy Campion told investors to expect "mid-single-digit reported revenue growth, roughly three points below our reported rate of futures growth." Global futures were up 8% on a reported basis at the time, and 11% at constant currency. 

That translated to 6% growth in net income, to $1.25 billion, and -- thanks to repurchases over the past year, including 19 million shares bought back for $1.1 billion during the quarter -- 9% growth in net income per diluted share, to $0.73.

Nike CEO Mark Parker added:

Fueled by an incredible summer of sport, Nike delivered strong global growth-and led the industry through disruptive innovation. Q1 also showed how we're amplifying every category through sports style innovation, transforming retail by connecting the digital and physical experience and ushering in a new Era of Personalized Performance -- through product, consumer connections and our supply chain. Nike's strategic investments in these growth opportunities continue to deliver long-term value to our shareholders.

Digging deeper

Within Nike's top line, NIKE Brand revenue climbed 10% year over year at constant currency, to $8.5 billion, driven by strong growth in sportswear, running, and the lucrative Jordan brand.

On a geographic basis, overall growth was held back by a modest 6% year-over-year increase in NIKE Brand North American sales, to $4.03 billion. Meanwhile, every international region achieved double-digit revenue growth on a currency-neutral basis, including increases of 10% in Western Europe, to $1.76 billion, 16% in Central and Eastern Europe, to $440 million, 21% in China, to $1.02 billion, 18% in Japan, to $245 million, and 11% in emerging markets, to $945 million. 

To be fair -- and just as management predicted in June -- this marks an improvement over flat reported growth in North America last quarter, which itself was partly due to a shift in the timing of certain orders in the same year-ago period.

Trending toward the bottom line, gross margin fell 200 basis points year over year, to 45.5%, as higher average selling prices were offset by what Campion insists are temporary headwinds, including foreign exchange, a greater mix of off-price products, costs associated with Nike's recent exit of its underperforming Golf equipment business, and "a shift of expenses from operating overhead to cost of goods sold."

More specifically regarding the latter, Campion explained that cost of goods sold includes Nike's investments in innovation, manufacturing advances, and "other product creation-related resources which have expanded significantly to fuel long-term growth."

And that's fair enough. Also, keep in mind Nike already told investors last quarter to expect gross margin to contract in fiscal Q1 as the company completed clearance of excess inventory to prepare for a stronger back half of the year.

Next, we can't forget Converse, the retro footwear specialist Nike acquired for just $305 million in 2003. Revenue at Converse grew 4% year over year at constant currency, as declines in Europe and Asia-Pacific only slightly offset growth in North America. Nike is still shifting the Converse brand to a more direct operating model overseas, and only began its transition to a new enterprise resource management system earlier this year. As Nike irons out the wrinkles in this new model, Converse should begin demonstrating steadier global growth from its respective year-ago periods.

Looking forward

Futures orders for NIKE brand footwear and apparel (scheduled for delivery from Sept. 2016 through Jan. 2017) climbed 5% year over year as reported, and 7% at constant currency, to $12.3 billion. That's another notable deceleration from last quarter's 8% and 11% growth in reported and currency-neutral futures orders, respectively. But it's not entirely surprising as Nike opts to effectively manage inventory and keep its line supply tight in today's increasingly difficult retail market. 

Also during this quarter's call, Campion pointed out that while futures are "still an important aspect of [Nike's] business model," they're also increasingly less accurate with regard to predicting future revenue given Nike's "evolving business mix." So futures will no longer be referenced as a stand-alone metric in Nike's earnings press releases going forward, but rather discussed during each subsequent conference call in the context of Nike's broader financial guidance.

Speaking of which, Nike now expects reported revenue in the fiscal second quarter to increase in the mid-single-digit range, according to Campion, "at or slightly below our rate of reported futures growth." Gross margin in the fiscal second quarter is also expected to contract by roughly 125 basis points, then approach flat levels in the second half compared to fiscal 2016. This represents a reduction from Nike's previous expectation for full fiscal-year gross margin to expand by 30 to 50 basis points, due primarily to the extended negative influence of the aforementioned gross margin headwinds Nike endured in fiscal Q1.

Finally, for the full fiscal year, Nike continues to expect high-single-digit reported revenue growth, and currency-neutral revenue growth in the high single to low double digits.

So apart from Nike's gross margin guidance reduction -- which the company argues is temporary and will serve to drive long-term growth -- there were no big surprises in Nike's latest quarter. In the end, as long as investors can continue enjoying the fruits of Nike's steady growth and aggressive capital returns initiatives, I think the market should be pleased with Nike's position today.