By Tess Stynes
Nike Inc. said its sales rose 4.8% as the athletic-gear maker
recorded revenue growth across most of its geographic markets and
product lines during the quarter ended in May.
However, continued pressure from a stronger dollar again weighed
on revenue growth and future orders.
Shares rose 2.4% to $107.73 in recent after-hours trading
Thursday as earnings beat analysts' expectations.
For the period ended May 31, the athletic gear maker's revenue
increased to $7.78 billion from $7.43 billion a year earlier.
Excluding the impact of a stronger dollar, sales improved 13%.
Analysts polled by Thomson Reuters expected a revenue increase
of 4% to $7.69 billion. The Beaverton, Ore., company had expected
an increase in revenue excluding currency impacts in the low
double-digits on a percentage basis, with reported revenue growth
eight percentage points to nine percentage points lower.
While Nike derives most of its income from North America and
footwear, more than half of its sales are further afield, where
economic and foreign-exchange pressures could hurt the company's
revenue and margins.
World-wide orders of Nike apparel and footwear for delivery from
June through November grew 2% from a year earlier, including
currency changes. That is well below the 11% increase that the
company reported for the year-earlier period but unchanged from the
last quarter.
Excluding currency fluctuations, future orders rose 13% from a
year ago.
That marked an improvement from the 11% increase in the last
quarter.
The future orders don't necessarily reflect actual revenue
growth, but the metric is closely followed by analysts looking for
insight into global demand for Nike's products.
Nike has benefited from cultural trends that favor its products,
including the rise of athletically styled footwear and clothes
among consumers that aren't necessarily planning a workout. During
the latest quarter Nike brand apparel sales rose 17%. Excluding
currency impacts, global apparel sales improved by 7%.
Overall Nike brand sales rose 5.2% to $7.38 billion, but
excluding foreign-exchange rates the increase was 13%.
In North America, where Nike dominates the market, Nike brand
sales grew 13% to $3.73 billion.
Excluding currency impacts Nike brand sales climbed 17% in
Western Europe, home of Nike's chief rival Adidas AG, and jumped
20% in Central Europe. However, in emerging markets Nike brand
sales fell 3%.
Over all, Nike reported a profit of $865 million, or 98 cents a
share, up from $698 million, or 78 cents a share, a year earlier.
Analysts expected per-share profit of 83 cents.
Gross margin rose to 46.2% from 45.6%, mostly on higher prices
and continued growth in its higher-margin direct-to consumer
business.
The company's effective tax rate was 17.8% in the latest
quarter, compared with 23.5% a year earlier.
Nike has used expensive sponsorships to increase its market
share in sports such as soccer and basketball. In the latest
period, Nike reduced such spending--called demand creation--by 6.5%
to $819 million. The decrease reflected higher expenses related to
marketing support for the 2014 World Cup in the year-earlier
period.
Write to Tess Stynes at tess.stynes@wsj.com
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