Nike Profit Tops Estimates On Sprightly Demand

(RTTNews) - Nike Inc. (NKE) Thursday reported a better-than-expected increase in second-quarter profit, driven mainly by growth in North America, Europe, and China, with margins climbing as it shifted to more profitable products. In comparison, results for the prior year were impacted by a loss from discontinued operations.

"Our powerful portfolio fuels growth across our categories and geographies," said CEO Mark Parker in a statement. Parker has been instrumental in unleashing higher-priced products, with focus on innovations to stay ahead of its rivals.

While Nike has traditionally seen growth in North America and some strong contributions from Europe, this quarter witnessed a turnaround in China with Japan still a cause for concern. As for emerging markets, growth was sparse.

Nike, the world's largest athletic shoes and apparel maker, posted second-quarter revenue of $6.43 billion, up 8 percent from $5.96 billion last year. On average, 23 analysts polled by Thomson Reuters expected revenue of $6.44 billion for the quarter.

Nike brand revenue from North America climbed 9 percent year-over-year and Western Europe grew 18 percent. Among smaller markets, revenue in Central and Eastern Europe spiked 17 percent and China was up 8 percent. Sales in Japan slid 13 percent.

Sales of the Converse brand was up 14 percent, on growth in the United Kingdom, North America and China.

Results were also buoyed by gross margin that grew 140 basis points year-over-year to 43.9 percent, due to a shift to higher margin products, better prices, lower raw materials costs.

The Beaverton, Oregon-based company posted quarterly net income of $537 million or $0.59 per share, up from $384 million or $0.57 per share last year.

Results for the prior-year quarter included loss from discontinued operations of $137 million.

Twenty-six analysts had a consensus earnings estimate of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

As of the end of the quarter, worldwide future orders for Nike Brand athletic footwear and apparel - scheduled for delivery from December 2013 through April 2014 - grew 12 percent year-over-year to $10.4 billion.

During the second quarter, Nike repurchased 5.5 million of its shares for about $402 million as part of the four-year, $8 billion program approved in September 2012.

Last month, Standard & Poor's Ratings Services raised its rating for Nike further into investment-grade territory.

Nike has strong plans for the future. In October, it revealed plans to generate $36 billion in sales by fiscal year 2017.

Nike stock closed Thursday at $78.26, down $0.29 or 0.37%, on a volume of over 5 million shares on the NYSE. In after hours, the stock dropped $0.39 or 0.50%, at $78.65. In the past year, the stock trended in the range of $48.61 - $80.26.