Nike 3rd-quarter net up 32 percent
LOS ANGELES (Reuters) - Nike Inc (NKE.N) posted a 32 percent rise in quarterly net profit on Wednesday, well above expectations, boosted by a weak dollar and strong international demand, especially in China, sending shares up 5 percent.
Fatter margins and lower costs, along with a slightly lower tax rate, also boosted profit and the world's largest maker of athletic footwear and apparel said it was continuing to take market share from rivals in the United States, where sales rose 5 percent.
Susquehanna Financial analyst John Shanley applauded Nike's 27 percent sales gain in the Asia Pacific, along with a 23 percent jump in Europe and a 20 percent gain in the Americas.
"The real telling factor was the strong gain in Asia. That really knocks the cover off the ball," said Shanley.
Sales in China rose 50 percent in the quarter on a currency-neutral basis. Nike has already reached $1 billion in sales in China, a year ahead of its original target, Chief Executive Mark Parker said on a conference call.
Third-quarter net profit rose to $463.8 million, or 92 cents per share, from $350.8 million, or 68 cents per share, a year earlier. Total sales jumped 16 percent to $4.54 billion.
Wall Street, on average, had been expecting earnings of 80 cents per share on revenue of $4.36 billion, according to Reuters Estimates.
Gross margins rose to 45.1 percent of sales from 44.2 percent, while costs fell to 30.9 percent of sales from 31.7 percent.
Global orders for delivery of shoes and apparel from now until July rose 11 percent, Nike said. While futures orders abroad saw the healthiest growth, they rose a mere 1 percent rise in the United States.
Shanley expected U.S. orders to be flat or be slightly down.
"It's not a huge positive, but at least they didn't report a negative," he added.
TAKING MARKET SHARE AMID ECONOMIC UNCERTAINTY
Nike has seen rapid growth in emerging markets for its footwear as it gets ready for the Beijing Olympics this summer. The company said it could spend a third more than the previous year on marketing in the fourth quarter in advance of those games.
In addition, the company sees robust demand for its smaller, non-Nike brands, whose sales rose 15 percent in the quarter.
In the United States, Nike has been controlling inventory as athletic shoe retailers struggle to woo cash-strapped consumers. Continued...
