Nike Net Profit Rises, But U.S. Revenue Down
[2009-01-14]
Nike Inc's quarterly net profit rose 9 percent on strength in footwear, but lower sales in the United States and decelerating growth in Asia were concerns in its two biggest markets.
Nike, which has proven to be relatively resilient to the sluggish consumer environment around the world, said it was taking market share in footwear, although apparel and equipment sales suffered in the quarter.
Nike, which has proven to be relatively resilient to the sluggish consumer environment around the world, said it was taking market share in footwear, although apparel and equipment sales suffered in the quarter.
The world's largest athletic shoe and clothing maker said second-quarter net income rose to $391 million, or 80 cents per share, from $359.4 million, or 71 cents per share, a year earlier.
Analysts polled by Reuters Estimates had been expecting earnings of 78 cents per share, but it was not immediately clear whether those estimates took into account lower taxes that helped Nike's results.
"They did better than either I or most other analysts were looking for," said Susquehanna Financial analyst John Shanley.
In a conference call, Chief Executive Mark Parker said the company was being cautious and disciplined about managing costs in an economic downturn.
"Our performance in Q2 shows that Nike's nature and strength are enviable and competitive advantages," said Parker, adding: "We all know that no one, including Nike, is immune to macroeconomic forces."
Sales rose 6 percent, with gains in all regions except the United States, where revenue fell 1 percent. Revenue rose 6 percent in Europe and 22 percent in the Asia Pacific region.
Revenue in the company's non-Nike brands group, which includes Cole Haan, Hurley and Converse, fell 4 percent. Nike recently sold off two brands in the division: Bauer Hockey and the Starter Brand.
SLOWER GROWTH IN ASIA
Nike has managed to withstand the weakening consumer environment around the world and has even raised prices in the United States, its largest, most mature market. Business this year was also buoyed by interest in the Beijing Olympics, with China as Nike's fastest-growing market.
But business in Asia has slowed since the Olympics. In Nike's first quarter, revenues in the Asia Pacific region rose 36 percent. They rose 39 percent in the fourth quarter of 2008, which preceded the Olympic Games.
"That has to do with the fact that you can't keep the momentum going at the same pace," said Shanley, who described the news as "not a positive."
Nike Brand President Charlie Denson said the company still feels "very good about China and it's growth potential."
Nike said its global orders for delivery of shoes and apparel now through April fell 1 percent, but rose 6 percent on a constant currency basis.
U.S. futures orders rose 6 percent in the United States, but fell 13 percent in the region that includes Europe, the Middle East and Africa. Orders rose 11 percent for the Asia-Pacific region and 6 percent for the Americas.
Gross margins rose in the quarter to 44.7 percent of sales from 44.3 percent, helped by favorable hedge results and price increases. The company's tax rate also fell to 24.9 percent from 30.3 percent a year earlier.
But marketing costs and overhead spending rose in the quarter, Nike said.
Inventories rose 9 percent in the quarter, driven by growth in footwear, which Denson said was "enjoying very strong demand in the marketplace."
He said the company was reducing its apparel inventories in Europe and the Americas.
Nike shares, which trade at about 12 times projected fiscal 2009 earnings, are valued above those of main German competitor Adidas AG, at 8 times estimated fiscal 2009 earnings.
Nike shares rose to $51.24 extended trade after closing on the New York Stock Exchange at $50.64, up 2 percent.
Source: Alibaba
Keywords:Shoe
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