Nike profit leaps 40 percent, with big sports year on tap
The world’s largest maker of athletic goods said Nike brand sales grew across every product type and region, in advance of the World Cup and Olympics next year.
The Associated Press
BEAVERTON, Ore. — Nike’s fiscal second-quarter profit jumped 40 percent, helped by higher average selling prices and an increase in revenue around the world.
Profit topped analysts’ expectations, though revenue came in slightly short. Shares rose 39 cents in aftermarket trading, from a close of $78.26 before the report. The stock is up 52 percent year to date and hit an all-time high of $80.26 last week.
The world’s largest maker of athletic goods said Nike brand sales grew across every product type and region. Sales of Converse items were especially strong in North America, Britain and China markets.
Profit margins were helped by Nike’s shift toward more profitable products and businesses, higher average prices and easing costs of raw materials.
Nike is readying for three major athletic events in 2014, the Super Bowl, World Cup and Olympics.
In a call with analysts Thursday, CEO Mark Parker said Nike has introduced its Brazilian and French World Cup uniforms, known as “kits,” that are using new technology to be 16 percent lighter than the uniforms made for the 2012 Euro Championships. They’re made of recycled polyester that uses the equivalent of 18 recycled water bottles in every uniform.
Western Europe revenue rose 18 percent to $1.07 billion during the quarter, with future orders up 26 percent in that region. China, which has seen slowing growth, showed signs of improvement, and Parker said he was “very encouraged” by revenue growth of 8 percent to $629 million there.
The company said it had problems in Mexico as it began using a new third-party logistics provider, leading to a shortfall of inventory at retail stores. Nike expects to be “shipping to demand” by the end of the third quarter, but it will take a few quarters to fully regain retail business.
At the end of the quarter, global future orders for Nike brand shoes and clothes to be delivered between December and April rose 12 percent year-over-year to $10.4 billion.
Profit for the three months ended Nov. 30 rose to $537 million, or 59 cents per share. That compares with profit of $384 million, or 57 cents per share, last year. Total revenue rose 8 percent to $6.43 billion from $5.96 billion.
Analysts expected 58 cents per share on revenue of $6.44 billion, according to FactSet.