Nike Profits Jump 33% in Q1 – Stock Jumps

Nike Profits Jump 33% in Q1 – Stock Jumps

Nike Inc. ( NKE ) Thursday reported a 33 percent jump in first-quarter profit, as demand gained momentum in North America and Europe, and gross margins climbed.

Nike’s earnings and revenue for the quarter topped Wall Street estimates, sending its shares to a new high for the year – gaining 6 percent in after-hours trading on the New York Stock Exchange.

“We had a great first quarter driven by our unrelenting commitment to delivering innovative products and services to athletes…,” said an ebullient Mark Parker, chief executive officer of Nike.

The world’s largest athletic shoes and apparel maker, Nike, has leveraged its traditional strength in the key North American market and is gaining ground in Europe, a bete noire for many retailers. But sales in an increasingly brand-conscious China has been a cause for concern, as was Japan.

During the quarter, Nike brand revenue from North America climbed 9 percent year-over-year, and Western Europe grew 11 percent. Revenue from emerging markets edged up 1 percent. Demand was spread across all products including footwear, apparel and equipment.

Among smaller markets, Nike brand revenue in Central and Eastern Europe grew 12 percent, while China fell 1 percent and Japan slid 20 percent.

Meanwhile, sales of its Converse brand was up 18 percent in the quarter, on growth in the United Kingdom, North America and China.

As a whole, the Beaverton, Oregon-based company posted revenue of $6.97 billion, up 8 percent from $6.47 billion a year ago. On average, 22 analysts analysts polled by Thomson Reuters estimated revenue of $6.96 billion for the quarter.

Nike gained from lower raw material costs, a shift in focus to higher margin products, and reduced discounts. That led to an 120 basis points improvement in gross margin to 44.9 percent for the quarter.

Nike’s net income for the quarter jumped to $780 million or $0.86 per share from $567 million or $0.63 per share last year. Twenty-four analysts had a consensus earnings estimate of $0.78 per share for the quarter. Analysts’ estimates typically exclude special items.

Meanwhile, as of August, worldwide future orders for Nike Brand athletic footwear and apparel, scheduled for delivery from September 2013 through January 2014, grew 8 percent from last year.

During the quarter, Nike repurchased 8.4 million shares for about $526 million as part of the four-year, $8 billion program approved in September 2012.

Nike stock closed Thursday at $70.34, up $1.42 or 2.06%, on a volume of 6.7 million shares. In the after hours, the stock gained $4.11 or 5.84%, to trade at $74.45. In the last 52-week period, the shares trended in a range of $44.83 – $70.56.