22 Mar Nike Profit Rises
Nike beat expectations, and its shares rose 8 percent in after-hours trading.
Nike has been dealing with Europe’s fluctuating economy and a slowdown in growth in China. The company has been reducing its inventory in China and reworking its offerings there to adapt to the changing tastes of Chinese consumers.
It also has been focusing on growth in North America, selling off less profitable brands like Umbro to focus on core brands like Nike.
The company’s quarterly results show Nike’s strategy is paying off in North America, but it still faces weakness in China. North American revenue, which accounts for 40 percent of all revenue, rose 18 percent to $2.55 billion. Revenue in China, which accounts for 10 percent of revenue, was down 9 percent to $635 million.
“The U.S. business continues to be just phenomenal,” said Paul Swinand, a Morningstar analyst. But he added that “for real long-term growth to be solid, it has got to come from China and emerging markets.”
In a call with analysts, the chief executive, Mark Parker, said the company was seeing progress in China, but “we still have more to do before we can capture its long-term growth potential.”
Net income for the three months ended Feb. 28 rose to $866 million, or 73 cents a share. That compares with $560 million, or 61 cents a share, last year. Analysts expected 67 cents a share, according to FactSet.
Higher labor costs were more than offset by raising prices and easing material costs, the company said.
Revenue rose 9 percent to $6.19 billion, from $5.66 billion last year, nearly matching analysts’ expectations of revenue of $6.2 billion.
Nike brand revenue rose 10 percent excluding currency fluctuations, growing everywhere but China and Japan. Growth from other brands, including Converse, Nike Gold and Hurley rose 9 percent.
Orders for Nike shoes and apparel to be delivered from May to July rose 6 percent to $9.9 billion. That includes an 11 percent increase in North America, a 5 percent decline in Western Europe and a 4 percent increase in China.
Mr. Parker said e-commerce was a focus for the future. Online revenue rose 33 percent in the quarter, but Mr. Parker said he would like to expand that business more. The company, he said, will improve the online shopping experience.
Shares rose $4.44, or more than 8 percent, to $58.04 in after-hours trading, after ending the day down $1.23, or 2.2 percent at $53.60.