Nike profit tops analysts' estimates
Nike, the world's largest sporting-goods company, reported second-quarter profit that topped analysts' estimates as sales gained in North America and the company controlled its marketing costs.
Excluding US$137 million in losses associated with the Umbro and Cole Haan businesses Nike is selling or has sold, profit was US$1.14 a share, the Oregon-based company said. Analysts projected US$1 a share, the average of 18 estimates in a survey.
While sales have dropped in some regions abroad, Nike's largest market of North America remains strong, with revenue in the region gaining 17 per cent amid demand for running shoes. Those gains should continue with orders for the Nike brand from December to April gaining 14 per cent in North America.
"North America looks strong," said Chris Svezia, an analyst for Susquehanna Financial Group.
Nike also spent about the same on marketing as a year earlier, which helped profit surpass estimates, he said.
The stock rose 4.7 per cent to US$103.70 in extended trading on Thursday. The shares, which closed at US$99 in New York, have gained 2.7 per cent this year. The stock has not closed above US$100 since September 12.
Total orders for the Nike brand, excluding currency exchange-rate changes, advanced 7 per cent. Analysts projected a gain of 7.1 per cent, the average of four estimates.
Sales for this quarter, which runs until the end of February, will increase by a low double-digit percentage, Chief financial officer Don Blair said.
The effects of changes in the value of currency would reduce that by one percentage point. Analysts projected a gain of 4.7 per cent to US$6.12 billion, according to a survey.
The company continued to see its business in China deteriorate as orders decreased 7 per cent. Sales last quarter sank 11 per cent to US$577 million. To improve the operations, the company is revamping its apparel offerings, said Charles Denson, the president of the Nike brand.
Nike has used discounts to clear inventory that was not selling and is debuting some tighter-fitting apparel to appeal to Chinese consumers, Denson said.
"They still have a tale of two companies," said Sam Poser, an analyst at Sterne Agee & Leach. "Footwear is extremely strong, and apparel needs a lot of work."