Nike is on the profit thanks to US sales
Total revenue rose 13 percent to $6.97 billion. Analysts projected $6.81 billion, on average.
Nike Inc. posted third-quarter profit that topped analysts’ estimates as the growing popularity of basketball shoes outside of the gym boosted sales in North America. Earnings per share in the three months through Feb. 28 were 76 cents, the Beaverton, Oregon-based company said in a statement.The average of 26 analysts’ estimates compiled by Bloomberg was 72 cents.
Nike’s third-quarter net income fell 21 percent to $685 million from $866 million a year earlier, when it booked a gain from the sale of its Cole Haan and Umbro businesses. The world’s largest sporting-goods company is benefiting from consumers increasingly buying athletic gear to wear every day, not just when working out or playing sports. For example, many of Nike’s shoe lines have become fashion accessories. That’s helped it continue to generate growth in mature markets such as North America, where sales gained 12 percent.
Total revenue rose 13 percent to $6.97 billion. Analysts projected $6.81 billion, on average. Sales increased in every geographic region, including China, which posted a decline last fiscal year. Orders for the Nike brand from this month to July rose 14 percent, excluding the effects of foreign-currency exchange-rate fluctuations. Analysts estimated a 12.7 percent gain, on average, according to data collected by Consensus Metrix. The measure, known as futures orders, is closely watched because investors view it as a proxy for future sales.
North America future orders rose 9 percent, marking the first time they hadn’t recorded a double-digit percentage gain since 2010. Orders in Greater China, which the company has been trying to turn around, declined 3 percent. Analysts expected a gain of 2.7 percent in China and 11.2 percent in North America.
The company’s gross margin, the percentage of sales left after subtracting the cost of goods sold, expanded 0.3 percentage point to 44.5 percent. That trailed analysts’ projections of 44.7 percent. The expansion was the fifth straight after two years of declines.
The North American sports gear market has been booming. Foot Locker Inc., the largest athletic-shoe chain in the U.S., posted a 5.3 percent gain in same-store sales during a fourth quarter in which many retailers struggled. Revenue at Under Armour Inc. surged 35 percent in its most recent quarter. Those gains are enticing companies from Gap Inc. to Urban Outfitters Inc. to expand into the category.