Nike Jumps After U.S. Sales Help Results Surpass EstimatesMatt Townsend
Nike Inc., the world’s largest sporting-goods maker, rose the most in almost six months after reporting earnings that topped analysts’ estimates, helped by demand in North America.
The shares increased 3.7 percent to $101.98 at the close in New York, the biggest gain since Sept. 26. Nike has jumped 29 percent in the past 12 months.
Net income in the quarter ended Feb. 28 rose 16 percent to $791 million, or 89 cents a share, from $682 million, or 75 cents, a year earlier, the Beaverton, Oregon-based company said Thursday in a statement. The average of 27 analysts’ estimates compiled by Bloomberg was 84 cents.
Nike has been on a roll after revamping its struggling China division, and benefiting from the trend of consumers wearing fashionable athletic wear and shoes as everyday items. That’s helped the company generate growth in mature markets such as North America, where sales increased 6 percent to $3.25 billion last quarter.
“Juggernaut.” That’s how Rob Plaza, an analyst at Key Private Bank, describes Nike’s results. “It’s really hard to bet against this company right now, and find a large-cap company to produce this kind of profitable growth.”
Key Bank, based in Cleveland, owns Nike shares.
The gains in North America, Nike’s largest market, will continue -- with orders for delivery from March through July rising 15 percent. Analysts estimated an 11.6 percent gain, on average, according to researcher Consensus Metrix.
Total orders rose 11 percent, excluding the effects of foreign-currency exchange-rate fluctuations. That topped estimates of 9.9 percent. The measure is closely watched because investors view it as a proxy for future sales.
The China division also bounced back. Revenue rose 15 percent and orders advanced 22 percent, topping an estimate for a 13 percent gain.
Nike is taking advantage of missteps at Adidas AG, the No. 2 supplier of sports gear. After years of losing market share, the Herzogenaurach, Germany-based company is looking for a replacement for Chief Executive Officer Herbert Hainer. Next week, the company is expected to announce a turnaround plan.
Total revenue advanced 7 percent to $7.5 billion. That missed the $7.6 billion average of analysts’ estimates.
Delayed shipments caused by the slowdown at U.S. West Coast ports reduced sales in the period, and it will take a few quarters to get the flow of products back to normal, Nike said.
The strength of the U.S. dollar continued to weigh on Nike’s results overseas, where it generates more than half its revenue. Sales in western Europe gained 10 percent last quarter. Without the Euro’s weakness against the dollar, they would have advanced 21 percent.
The strong dollar will hurt sales, gross margin and profit next fiscal year, Don Blair, Nike’s chief financial officer, said on a conference call Thursday. Revenue will gain in the mid-single percentage range. Analysts were projecting growth of 7.5 percent. Earnings per share will increase a maximum at a low-double digit percentage. Analysts expected a 13 percent advance.
“Foreign currency headwinds have intensified,” CEO Mark Parker said on the call. “This is the environment that all companies now operate, and Nike is not immune.”