By John Kell
Nike Inc.'s (NKE) fiscal third-quarter sales leapt a
better-than-expected 13%, as the sporting-gear company reported
broad sales growth among key regions as consumers spent more on
footwear and apparel.
Shares fell 3% to $76.90 after hours, after Nike during a
conference call with analysts tempered outlook targets due to
unfavorable currency fluctuations.
Currency headlines led Nike to temper expectations for the
fiscal fourth quarter, now seeing revenue to rise at a
high-single-digit rate, down from the December view of
low-double-digit growth. Nike also sees ongoing currency pressure
next fiscal year, affecting earnings growth.
Despite the currency woes, demand for athletic gear in the U.S.
has been impressive in recent years, and Nike and other competitors
have also benefited from rising growth in several international
markets.
Nike's slate of new gear has excited analysts and consumers,
including Flyknit shoes and a new Nike+FuelBand movement-tracking
wristband. Later this year, Nike and other sporting gear makers are
poised to benefit from sales of products tied to the World Cup
soccer tournament.
Regionally, sales in the latest quarter jumped 12% in North
America and rose 19% in Western Europe excluding currency changes.
Greater China sales rose 7%, and the top line rose 19% in emerging
markets.
Total Nike-branded footwear sales grew 16% excluding currency
changes, while apparel posted a 12% increase and equipment sales
jumped 9%.
Future orders, an indicator of growth, grew 14% excluding
currency impacts in the latest quarter, with growth in North
America, Europe and emerging markets more than offsetting modest
declines in Japan and greater China.
The future orders are for Nike-branded footwear and apparel
delivery between March and July, but don't necessarily reflect
actual revenue growth. Still, the metric is closely followed by
analysts.
For the quarter ended Feb. 28, Nike reported a profit of $685
million, down from $866 million a year ago. On a per-share basis,
earnings from continuing operations rose to 76 cents from 73 cents
a share. The prior-year results included a $231 million gain, net
of tax, tied to the sale of Cole Haan.
Analysts surveyed by Thomson Reuters predicted a profit of 72
cents a share.
Revenue grew 13% to $6.97 billion, compared with Nike's
projection of top-line growth in the single digits, while Wall
Street forecast an 8% increase.
Gross margin widened to 44.5% from 44.2%, boosted by higher
average prices.
Write to John Kell at john.kell@wsj.com
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