(Recasts; adds details, comments from conference call)
By Phil Wahba
March 20 Nike Inc on Thursday warned
Wall Street that growing pressures from weaker currencies in key
emerging markets would take a big toll on its profit in the
current quarter and into the next fiscal year.
The maker of sports shoes and apparel also said sales in
China would be unchanged or even down slightly this quarter,
reawakening concerns it is having trouble finding its bearings
in that market after signs of progress in recent quarters.
Nike shares fell 3 percent to $76.88 in after-hours trading.
Chief Financial Officer Donald Blair told analysts on a call
that the devaluation of developing market currencies against the
U.S. dollar "will be a significant drag on next year's reported
revenue, gross margin and profit growth."
Blair said Nike now expects earnings per share in the fiscal
year beginning in June that will be "somewhat" below the
company's mid-teens-percentage target.
Nike gets about 30 percent of its revenue from emerging
markets, China and Eastern and Central Europe.
Still, the fundamentals of Nike's business were solid, with
strong demand for its merchandise heading into the World Cup
soccer tournament in June and July.
Orders for Nike-branded shoes and clothing scheduled for
delivery between March and July 2014, a gauge of demand Nike
calls "futures orders," rose 14 percent globally, excluding the
impact of currency fluctuations, led by a 30 percent jump in
The company also reported a better than expected profit for
the third quarter ended Feb. 28, helped by a large jump in
revenue in Western Europe, where it competes with Adidas AG
Nike has been spending heavily on marketing ahead of the
World Cup, which Brazil will host this summer.
Total revenue rose 12.7 percent to $6.97 billion for the
quarter ended Feb. 28, above the $6.69 billion analysts were
expecting, according to Thomson Reuters I/B/E/S.
In China, where Nike has grappled with the lingering effects
of excess inventory and intense competition from rivals cutting
prices in recent years, sales rose 7 percent.
"They continue to produce items that resonate with shoppers
globally," said Edward Jones analyst Brian Yarbrough. "They're
gaining share in each of their markets." Still, the poor
forecasts for China were worrisome, Yarbrough said.
Nike earned $685 million, or 76 cents a share, in its fiscal
third quarter ended Feb. 28, compared to $866 million, or 73
cents per share a year earlier. Excluding discontinued
operations, Nike had a profit of 76 cents per share for the
quarter, four cents better than Wall Street had expected.
(Reporting by Phil Wahba in New York; Editing by Chizu Nomiyama
and James Dalgleish)