Nike’s 3rd-quarter profit rises
Friday, March 23, 2012
NEW YORK (AP) — It’s the swoosh heard ‘round the world.
Nike Inc.’s third-quarter results demonstrated the sneaker and athletic gear maker’s global popularity on Thursday, when it said its revenue rose in all geographic regions, with particular strength in North America and emerging markets.
The world’s largest maker of athletic shoes and clothes also said its orders heading into spring were up 15 percent from a year ago, signaling continued strong demand for its goods ahead of the Olympics and European soccer championships in June.
The results beat analysts’ expectations. But higher costs ate into Nike’s gross margin, or the amount of each dollar in revenue a company actually keeps.
Consumer product makers across the board are facing high costs for materials, labor and freight. Nike said some of its costs were easing, though its labor costs remain high.
“I believe there is some stability easing into the broader marketplace as consumer confidence moves higher in most parts of the world,” CEO Mike Parker said.
Still, Nike, known for its trademark swoosh symbol, sounded an upbeat note about new products and upcoming major sporting events.
“Our timing is great as we head into an exciting season of sport that starts in a few days with the Final Four (NCAA basketball championships) and then builds towards the Olympics and Euro champs,” said Parker. “These are the moments we love.”
Net income for the quarter that ended Feb. 29 rose to $560 million, or $1.20 per share.
That’s compared with $523 million, or $1.10 per share, in last year’s fiscal third quarter. And it beats the $1.17 per share that analysts polled by FactSet expected on average.
The company, based in Beaverton, Ore., said revenue rose 15 percent to $5.85 billion, just beating the $5.82 billion analysts expected. North American revenue rose 17 percent, Western Europe revenue rose 4 percent, Central and Eastern Europe revenue rose 9 percent, China rose 25 percent and emerging markets rose 23 percent.
A weak spot was Japan, still recovering from the earthquake and tsunami of last year. There, revenue rose 3 percent, but it fell 3 percent when adjusted for currency fluctuations.
Nike raised a ruckus in February, when it released its outer-space themed Foamposite Galaxy sneakers. Crowds of people waiting in line for a chance to hand over $220 for the glow-in-the-dark shoes dissolved into conflicts. Similar scenes occurred in December when Nike released its retro Air Jordan XI basketball sneakers.
Products Nike introduced this month include FlyKnit lightweight shoes, which use technology that knits the entire top of the shoe with a single piece of synthetic yarn. The ultralight sneakers are to be worn by Olympic athletes from the U.S., U.K., Russia and Kenya, and they’re be available to the general public in July.
The company also plans on June 29 to start selling Nike+ technology-equipped basketball and training shoes, which send performance information directly to mobile apps.
In its fiscal fourth quarter, the company expects revenue to rise by a percentage in the low double digits, mainly driven by sales of its Nike and Converse brands. It expects its earnings per share to grow by a percentage in the mid-teens.
Nike shares edged up $1.23 to $112.22 after hours. Before the company reported its earnings, the stock ended regular trading at $110.99, up 55 cents. It’s up 15 percent since the beginning of the year.
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